Isn't it much easier to believe that this is simply the opening of a second front? Perhaps this thread should be renamed 'changing tactics in the strategic struggle in the economic sphere'? I see no 'delinking'.

China knows that there are unreliable elements in the business world, akin to the sort of quislings found commonly in national business organizations, a good parallel being the Confederation of British Industry and its attitudes towards the EEC/EU. China can be reasonably sure that by playing up to these, less dependable, interests there is a chance it can weaken PM Abe's domestic political base. Why not have a go?

This is the strategic, international, manifestation of a basic difference in economic opinion. On the one hand, the salaryman business lobby wants lower wages (for everyone other than itself), and sees addition of Chinese 'cheap labour' capacity as way of achieving this aim. There are, it goes without saying, no instances of a recovery which has been founded on cutting wages, but it is economic orthodoxy that such an outcome is possible even though it has never been observed.

On the other, reflation requires higher wages in Japan and thus is more or less fundamentally incompatible with the strategy of salaryman companies that has emphasized overseas, and particularly, Chinese expansion. It is notable that the recovery of the late 1930s in the US has been characterized as one involving a high wage policy (eg P. Temin or T. Ferguson). It is also potentially provocative of the Abe administration to push so openly for higher wages (although to do so is perfectly consistent with this administration's strategic position).

Against this background, however, China can play on the various tensions exacerbated by these two economic visions, one of which is embodied in a domestic Japanese lobby it might suborn. One suspects it has been encouraged to do so by several prominent individuals associated with trading companies who lead lobbying for China in Japan. (This is not, however, to say that all business is unreliable or unthinking.)

Put differently, the salaryman strategy of shafting the rest of the country reaches its logical conclusion in selling the country out. And China is playing to that end.

AK

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