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Japan, India agree on tighter ties amid China risk


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JAPAN and India pledged closer strategic ties between Asia’s second and third biggest economies in talks yesterday, as Tokyo struggles to offset the risk of its growing dependence on giant rival China.

Trade and investment flows with India have been unspectacular as Japanese firms focus on business with China and Southeast Asia, but recent Sino-Japanese tensions have underscored the risk of over-reliance on China’s dynamism to help Japan’s stalled economy.

Indian Prime Minister Dr Manmohan Singh and Japanese Prime Minister Naoto Kan endorsed a bilateral economic partnership deal and urged speedy agreement on a civil nuclear pact that would give Japanese firms access to India’s fast-growing market.

They also decided to seek cooperation in developing, recycling and finding substitutes for rare earth minerals and rare metals, used in goods such as electronics and auto parts. Japan’s government has expressed concern that China is holding back shipments of rare earth after a recent territorial row.

“India is the world’s biggest democracy and it currently has the world’s second biggest population. Its growth potential matches that of China,” Kan told reporters after meeting Dr Singh. “Japan-India ties have great possibilities.”

Sino-Japanese relations deteriorated sharply last month after Japan detained a Chinese trawler captain whose boat collided with Japanese patrol ships near a chain of disputed islands in the East China Sea, called Senkaku in Japan and Diaoyu in China.

“Japan wants to cultivate India as a strategic partner to offset problems in its relationship with China,” said Jeffrey Kingston, director of Asia studies at Temple University’s Japan campus.

“Japan remains economically closely tied to China and will for the foreseeable future, but clearly, it behoves the Japanese government and businesses to hedge their bets.”

Trade between Japan and India, Asia’s second and third biggest economies, totalled $11.55bn (£7.28bn), four per cent of Japan’s trade with China.

In September, Tokyo and New Delhi clinched a basic accord on an economic partnership agreement (EPA) to promote two-way trade and investment, concluding more than three years of wrangling over such sticking points as tariffs on Japanese car parts and tough checks on Indian pharmaceutical goods.

“I strongly believe that we can, and we must, synergise our complementary stance to impart new momentum to Asia as well as global economic growth and prosperity,” Dr Singh told a group of business leaders from both countries.

He also said he hoped Japan’s decision to treat Indian generic drugs the same as domestic products and finish approval procedures smoothly would create new business chances for India drug companies including makers of generic medicines.


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