Asia's new Great Game: Japan and China have renewed their struggle to rule Asia, says Terry McCarthy

ONE OF THE grand conflicts in the last century, immortalised by Kipling in Kim, was the 'Great Game', the struggle for influence and control over Central Asia by Tsarist Russia and the British in India. In some ways the forerunner of the Cold War, it involved a colourful cast of explorers, spies, double agents and impostors of all kinds who competed for influence in an area that stretched from the Black Sea through Persia and Afghanistan to the Himalayas.

Today, with the Cold War ended, the Great Game has shifted eastwards. A new version is being played, with equal intensity, between China and Japan, respectively the biggest and richest countries in Asia. The actors are more nondescript than in Kipling's day: blue- suited bureaucrats and businessmen and khaki-clothed military officers. But the tools of the game are more sophisticated: hi-tech investment, off-shore financial instruments, diplomatic leverage, advanced weapons systems and the ultimate threat of the Bomb. And the prize is just as great: influence and control over East Asia, the fastest-growing economic region in the world.

The US and other Western countries are little more than spectators in this game. US forces in the region have been reduced. US policy-makers, blinkered by their twin obsessions with human rights and trade deficits, seem unable to take a broader view of what is transforming the lives of 2 billion people in East Asia. And Western businessmen are noticeable only by their absence in most of Asia's key markets.

This has left a huge vacuum throughout most of East Asia, which China is beginning to fill. After centuries of civil strife and economic decline, the rapidly modernising Middle Kingdom is starting to reclaim its historical position of dominance in the region. Japan, which invested heavily in Asia in the Eighties to forge its own sphere of influence, has been taken somewhat by surprise at the sudden appearance of China in its rear mirror, both as a military and a commercial force.

And so the Great Game for East Asia has begun.

Since 1988 China's military budget has doubled, and to the dismay of its neighbours it has been acquiring advanced weapons systems from Russia. Particularly striking is the shift in emphasis from the land-based army that defends the country's borders, to the navy and air force, which can project force out into the South China Sea and the Pacific.

With in-flight refuelling, a new generation of fighter planes, advanced radar and missiles for its ships, and rumours that it will buy or make an aircraft carrier, Peking is demonstrating that it is serious about becoming the regional superpower. And it remains the only self-declared nuclear power in Asia.

Japan is cautious in its response. Because of the domestic pacifist lobby and the fears of its neighbours, it cannot engage in an outright arms race with China, even if it wanted to. Instead, Tokyo is using the weapons of its aid budget, investment flows and commercial penetration of other Asian countries to counter Chinese influence. At the same time it is quietly building a military force that is small in manpower, but equipped with state-of-the-art technology. The Japanese navy, with its Aegis- class destroyers and sophisticated over- the-horizon radar is second only to the US fleet in the Pacific.

Relations between China and Japan have never been good. Of all East Asian peoples, the Japanese were the only ones through history to refuse to kow- tow to the Chinese Emperor, the 'Son of Heaven', and accept the traditional relationship of suzerainty under the Middle Kingdom. Last year's visit by Emperor Akihito to Peking was the first ever by a Japanese emperor to China in recorded history. And the Chinese have still not forgotten the 12 million who died and the rape and pillage of their country during Japan's invasion from 1931-45. Unified and increasingly confident, China is determined to reassert itself in Asia.

The new Great Game is played out from the cold steppes of the north to the tropical forests of East Asia. Mongolia, for example, newly independent from Russian influence, has suddenly begun receiving huge amounts of economic aid from Japan. This is designed to prevent the large but underpopulated country becoming a satellite of China.

In the East China Sea, Chinese naval vessels have been firing at Japanese ships around the disputed Senkaku islands. Tokyo kept silent at the provocation for some years, until finally it sent protests to Peking last summer. Unperturbed, China continues to assert its oil-drilling rights in large tracts of the East and South China Seas.

Further south, Japan's influence in Thailand from its massive industrial investments is balanced by the Chinese military's relationship with the Thai army. Peking supplies the Thais with tanks, artillery and ships, all at 'friendship prices'. A recent delivery of six frigates even came with Chinese military advisers: not unusual in the world of arms sales, but inconceivable 20 years ago when Peking was supporting Communist rebels in the Thai

jungles.

About 70 Chinese military advisers are also working in Burma, some of them on the construction of a new naval base on the Andaman Sea. This, coupled with the new surge in cross- border trade between China and northern Burma, and the construction of service roads, has made the Japanese fear that China is seeking to 'encircle' South-east Asia, and at the same time gain possible port-call rights for its navy in the Indian Ocean. This is one of the main reasons that Tokyo continues to give loans to the government in Rangoon, despite international condemnation of the ruling military junta.

Chinese influence is also evident in Laos, with plans to build a road from southern China down to the Thai border, to link up with a bridge being built over the Mekong. Chinese goods are already making their way through Laos to the markets of north-east Thailand.

Japan is countering with its commitments to the other two Indo-Chinese countries, Cambodia and Vietnam. Vietnam in particular is of interest to Japan, because of its long history of hostility with China. Last January former Prime Minister Kiichi Miyazawa proposed setting up an Indo-Chinese development body that would give Tokyo an enhanced role in dispensing aid to the two countries. Japan is already one of the main aid donors to Vietnam, and last year Tokyo sent peacekeeping troops to Cambodia and pledged further financial aid to Phnom Penh.

Sixty-five per cent of Japan's foreign aid programme - the largest in the world - is spent in Asia, and 20 per cent of that is devoted to China. Tokyo's strongest card in countering China's new-found assertiveness is its investment in China itself; Japan does more trade with China than any other country except the US. Tokyo hopes that China's economic reform programme will become so reliant on Japanese technology and investment that rivalry between the two countries will be blunted.

But even this trump card is being devalued: Japanese businessmen no longer hold a monopoly on capital and scientific know-how in Asia. They are rapidly being outflanked by Chinese businessmen from Taiwan, Hong Kong and South-east Asia, who are now investing three times as much in China as Japanese and US businesses combined.

This quirk in the Great Game, where former fugitives from Chinese Communism are now flocking back to invest in the motherland, has a paradoxical consequence. As overseas Chinese money floods into mainland China, the Chinese authorities gain a subtle influence in the opposite direction, as investors are pledged to the country where they have built their factories and office blocks. Even Singapore's Lee Kuan Yew, who has done more than most to attract Japanese investment to his country, has shown that his real loyalty in the Great Game is to his Chinese heritage. In his speeches the former Singaporean Prime Minister now serves as a policy interpreter between Peking and the West.

Neither China nor Japan want the Great Game for East Asia to end in war, and perhaps it will not. Russia and Britain did not go to war over India in the last century. In some areas Chinese and Japanese interests even overlap. Neither country wants to see a reunified and strengthened Korean peninsula. Nor do they want to see any regional conflict breaking out that could disrupt trade routes.

But China, with its large population and land mass, has committed itself to a gradual but fundamental shift in the balance of power in Asia, and is deploying its military and business networks to achieve this. Japan, an insecure, insular power dependent on export markets, is determined to resist strangulation. The stakes are high in the Great Game for East Asia.

(Photograph omitted)