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East Asia (2008) 25:223241 DOI 10.1007/s12140-008-9051-2

The East China Sea Issue: Japan-China Talks for Oil and Gas

Kung-wing Au

Received: 23 January 2008 / Accepted: 21 April 2008 / Published online: 1 July 2008 # Springer Science + Business Media B.V. 2008

Abstract Japan and China argued for oil and gas in the East China Sea. The issue flared up in 2003. Between 2004 and 2007 the two sides held 11 rounds of official talks in order to resolve the issue. They sought demarcation of the sea and joint development in the disputed area. The gap between positions remained wide. China claims its continental shelf; Japan proposes a median line. By closely monitoring different rounds of talks, remarks, developments, maneuvers, negotiators and dates, it is possible to construct a broad picture of the issue to measure progress and predict outcomes. It is found that improving relations not only facilitate negotiations but somehow exert pressure for a settlement. The general relationship did affect the pace of talks, which could produce a partial solution.

Keywords East China Sea . Japan-China talks . Median line . Oil and gas dispute . Sino-Japanese relations

Observers were holding their breaths when Chinese Premier Wen Jiabao landed in Tokyo on April 11, 2007, wondering what statement Japan and China would make for joint development of the oil and gas fields in the East China Sea. The same happened when Japanese Prime Minister Fukuda Yasuo landed in Beijing on December 27, 2007. These two occasions failed to produce concrete results. Much hope is now placed on Chinese President Hu Jintao s scheduled visit to Tokyo in 2008. The expectation for good news during such visits shows that improving relations necessitate, not just facilitate, a settlement of the issue. In light of the pressure generated for good neighborliness, how close is an agreement and how would it look like? This article ponders these questions by describing the issue and examining different rounds of talks that have been held so far. In doing so it shows that

K. Au (*) Department of Political Science, Fordham University, Lowenstein Building (9th Floor), 113 West 60th Street, New York, NY 10023, USA e-mail:

University, Lowenstein Building (9th Floor), 113 West 60th Street, New York, NY 10023, USA e-mail:


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although the meetings are kept confidential, by carefully looking at the develop- ments, remarks and maneuvers involved, a lot of information can be gathered to construct a broad picture, to gauge the distance between the two sides, and to predict likely outcomes. By looking at the participants in talks, the government agencies they come from, and the dates when talks are held, it is possible to find clues on how close the two sides have moved toward an agreement. Furthermore, in spite of the hard work by the technical experts from both sides and negotiations between foreign ministry officials, the impetus for breakthrough rests with the will of the political leaderships of the two countries; only they can explain to their people the need for striking a deal involving gains and concessions framed in terms of the interests of their own countries. Alongside recent research interests that focus on the negotiating behavior of the two nations [ 1 , 6 ], it is perhaps also necessary to examine the role of the overall atmosphere in influencing progress. How do political ties correlate with the pace of talks?

Development of the Oil and Gas Dispute

In August 2003, the state-owned China National Offshore Oil Corporation (CNOOC) and China Petroleum and Chemical Corporation (Sinopec) concluded contracts with two foreign oil companies, Shell and Unocal, to jointly explore for oil and gas in the East China Sea. The two Chinese companies each hold a 30 percent share in the project and the two foreign companies each hold a 20 percent stake. The project covers 22,000 square kilometers in an area known as the Xihu Trough. There was a formal signing ceremony in the Great Hall of the People, and Premier Wen Jiabao met with the representatives of the four partners, causing a great deal of international attention, especially those from Japan [8 ]. In mid-2004, drillings were apparently underway in several offshore sites [ 7 ]. Actually, there are at least seven existing or developing sites in the area, but three sites irked Japan because they are located just a few kilometers west of a median line proposed by Japan. These are Chunxiao (Early Spring), Duanqiao (Broken Bridge), and Tianwaitian (Sky Beyond Sky), known in Japan as Shirakaba, Kusunoki, and Kashi. All these fields are situated on the Chinese side of the median line, but their proximity to the median line caused concerns in Japan because the oil and gas reserves in the seabed on the Japanese side of the median line may be tapped by Chinese operations. The median line is a concept proposed by Japan. It runs from north to south and separates the sea with equal distance from the shores of the two countries. China does not accept this median line, citing the reason that it was unilaterally drawn by Japan without consulting with China. Instead, China claimed its right to develop the subterranean resources on its continental shelf, the edge of which crosses the median line and extends further eastward toward the Okinawa Trough. As a result, there is an area of overlapping claims, with the western boundary being the median line proposed by Japan, and the eastern boundary being the edge of China s continental shelf. From satellite images of the continental shelf, this area of overlapping claims is about 150 kilometers in width.

shelf. From satellite images of the continental shelf, this area of overlapping claims is about 150

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Under the UN Convention on the Law of the Sea, coastal countries can claim 200 nautical miles (370.4 km) from their shores as their exclusive economic zones (EEZ). The East China Sea is hardly wide enough to allow Japan and China to do that without conflicting claims. In the north, the distance from Kagoshima to Shanghai is 862 kilometers; in the south, the distance from Naha in Okinawa Prefecture to Wenzhou in Zhejiang Province is 726 kilometers. If one wants to measure the distance from the smaller islands in the Ryukyu chain, the sea is even narrower. From Japan s perspective, an EEZ based on the Japan-controlled Senkaku Islands (the Chinese Diaoyutai Islands) would not only extend to China s coastal waters but also cut across a portion of Chinese land. Japanese media seem to believe that, in order to avoid antagonizing China, in the past several decades Japan refrained from oil and gas exploration in the East China Sea even though it was technologically mature to do so. Tokyo waited for some sort of agreement or understanding with Beijing before making the move. Thus, the recent move by China to find oil and gas in that area has been viewed by Tokyo as a unilateral move. Referring to Chunxiao gas field, Japanese Foreign Ministrys assistant press secretary Akira Chiba said that Japan does not welcome any unilateral move and that it is the Chinese side that has suddenly decided not to keep its word and to start exploiting that area. 1 Japan demanded a halt of the Chinese operation, but China said that the three controversial sites are not in any disputed area. As Japan protested, China continued its drilling activities. Shell and Unocal pulled out of the project in September 2004, citing unexplained commercial reasons. Analysts said their move cast doubt on the potential of the Xihu Trough. This development resulted in CNOOC and Sinopec becoming the only players in the project. In their joint statement, CNOOC and Sinopec said Shell and Unocal had pulled out since both sides have failed to agree on the existing development plan. 2 But it is also possible that Shell and Unocal had pulled out because they did not want to antagonize Japan. Meanwhile, the Chinese companies said they remained confident in the project and the Chunxiao field would begin production in the middle of 2005. In April 2004, the then Japanese Foreign Minister Kawaguchi Yoriko visited China and demanded for geological data on the drilling sites. In response, the then Chinese Foreign Minister Li Zhaoxing proposed joint development in the East China Sea. But Li s offer was not readily accepted by the Japanese side, prompting the Japanese media to call for joint development. 3 During subsequent talks, Tokyo modified its position and became more receptive to the idea of joint development, but the two sides could not agree on which area to develop and what form of cooperation should take place.

1 Chinas CNOOC says disputed gas field work on track. (2006, April 6). Reuter. Retrieved from http://

2 Oil giants pull out of East China Sea gas fields project. (2004, September 30). Peoples Daily. Retrieved from .

3 See, for example, Asahi Shimbun s editorial, Japan Must Listen to Beijing s Call for Joint Development,June 24, 2004.

Asahi Shimbun ’ s editorial, “ Japan Must Listen to Beijing ’ s Call for Joint


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Media reports on subsequent consultations revealed that Tokyo wanted to participate in developing the three Chinese sites through capital investment and/or technological assistance. But Beijing rejected the idea because these sites had already begun or were about to begin production. In fact, a China-supported, Hong Kong-based newspaper reported in January 2007 that Chunxiao gas field had begun to supply Ningpo and Shaoxing of Zhejiang Province with natural gas since September 2006. The report caused concern in Japan and inquiries at several press conferences in the Chinese Foreign Ministry. The ministry s spokesperson first said she did not know the specifics, 4 and later said the report was not true, 5 presumably to calm the nerve of Japan. Prime Minister Koizumi Junichiro said the sea of confrontation should be turned into the sea of cooperation, but Tokyo s response was tit for tat. In mid- 2005, the Japanese government granted Teikoku Oil Company the right to explore for oil and gas in the East China Sea. Teikoku and several other Japanese oil companies applied for drilling rights in the late 1960s, 6 but Tokyo did not give the green light, presumably because it did not want to antagonize China, as mentioned above. With government approval, by July 2005 Teikoku had drafted plans to develop three fields along the Japanese side of the median line (see Map. 1 ). Since China did not recognize the median line, such a move was viewed as a violation of Chinese territorial sovereignty because the sites were situated on China s continental shelf. Besides, the positioning of these sites was provocative because they were just a few kilometers from the Chinese fields and could, if they were developed, siphon off the oil and gas in the seabed on the Chinese side. Beijing s response was swift and strong. Huang Xingyuan, a spokesman for the Chinese Embassy in Tokyo, said that any move by Japan to explore for oil and gas in that area would be viewed by Beijing as an invasion of Chinese territory and be viewed as a highly provocative act. [ 2 ] Beijing lodged a strong protest and Qin Gang, a Chinese Foreign Ministry spokesman, said that China reserves the right to take further action against the Japanese move. Amid heightened tensions, Teikoku refrained from exploration activities. Masaki Akasaka, the company s spokesman, said that we want to go out soon but safety is of the utmost importance and we will need the governments support. [5 ]

Levels of Officials in Talks

At present, the dispute is being negotiated by the middle-level career officials from the foreign ministries of the two countries, and they are aided by the officials responsible for natural resources. The Chinese team is headed by Hu Zhengyue, director-general of the Department of Asian Affairs in the Chinese Foreign Ministry; the Japanese team is headed by Sasae Kenichiro, director-general of the Asian and Oceanian Affairs Bureau in the Japanese Foreign Ministry. Actually, up to the third

4 Chinese Foreign Ministry press conference, February 2, 2007.

5 Chinese Foreign Ministry press conference, February 6, 2007.

6 China, Japan Resume Talks on Disputed Gas Drilling. (2005, September 30). China Daily. Retrieved from

30). China Daily . Retrieved from – 09/30/content_482203.htm .

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East Asia (2008) 25:223 – 241 227 Map 1 Teikoku ’ s Exploration Plan. This map

Map 1 Teikokus Exploration Plan. This map was posted on Teikokus website in July 2005. Note the median line dividing the sea. The three small circles on the right of the median line represent the three sites Teikoku wants to develop, and they are facing the three Chinese sites on the left of the median line. The shaded area represents the area of exploration rights granted to Teikoku by the Japanese government. The area not shaded is the Japan-Korea joint development zone, which has not been recognized by China. On the Chinese side of the median line are, from top to bottom, Pinghu, Duanqiao, and Chunxiao gas and oil fields. The Chinese continental shelf would extend across the median line toward Okinawa. Source: http:// (Retrieved July 15, 2005)

round of talks, the Chinese team was headed by Cui Tiankai, who amid the talks was promoted to the position of Assistant Minister of Foreign Affairs and was succeeded by Hu Zhengyue. Cui Tiankai himself became the Chinese Ambassador to Japan in late 2007. On the Japanese side, the first round of negotiation was conducted by Yabunaka Mitoji, who was soon succeeded by Sasae Kenichiro; and Kodaira Nobuyori, director-general of the Agency for Natural Resources and Energy under the Ministry of Economy, Trade and Industry (METI), always attended the talks as a prominent member of the Japanese team, seemingly in no way less important than Sasae Kenichiro. After the fifth round of talks, Kodaira Nobuyori was replaced by Mochizuki Harufumi, the new director-general of the Agency for Natural Resources and Energy, who continued to occupy a prominent position in the Japanese team.

of the Agency for Natural Resources and Energy, who continued to occupy a prominent position in


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Table 1 Date and venue of talks





25 October 2004 3031 May 2005 30 September1 October 2005 67 March 2006 18 May 2006 89 July 2006 29 March 2007 6 April 2007 11 April 2007 25 May 2007 26 June 2007 11 October 2007 14 November 2007 28 December 2007














Experts meeting


Tokyo summit










Beijing summit


Source: compiled by the author

Conspicuously, when Prime Minister Fukuda Yasuo visited Beijing in December 2007, Mochizuki was a member of his entourage; this indicates the importance of energy talks between the two sides. In general, the negotiation teams from both sides have 17 18 persons. For example, during the third round of talks, the Japanese team has 18 officials from the Ministry of Foreign Affairs, the Agency for Natural Resources and Energy, the Cabinet Secretariat and the Coast Guard. The Chinese team has 17 officials from the Ministry of Foreign Affairs, the National Development and Reform Commission, the State Oceanic Administration, and the Chinese Embassy in Tokyo. 7 Although the negotiators are not top officials; they are not junior ones. The Chinese Foreign Ministry has seven region-based departments plus one department dealing with regional organizations and issues. The Department of Asian Affairs is one of the seven region-based departments and oversees affairs with 23 Asian countries, including such great powers as Japan and India. The Chinese team is led by the head of this department. On the Japanese side, METI, the successor of the elitist MITI described by Chalmers Johnson [4 ] is a powerful ministry with 13 bureaus and agencies, and the Agency for Natural Resources and Energy is one of them. The head of this Agency participates in the talks as a co-head of the Japanese team.

Different Rounds of Talks

See Table 1 .

Round 1: October 25, 2004, Beijing

Although no details were revealed about the talks, the intensity of the talks and the widely differing views can be sensed from the angry words of Nakagawa Shoichi,

7 Japanese Foreign Ministry announcement, October 1, 2005.

can be sensed from the angry words of Nakagawa Shoichi, 7 Japanese Foreign Ministry announcement, October

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the then Japanese Trade and Industry Minister, who said after the talks that I don t know why these discussions were even held I don t plan to get involved in further talks that end without resolution. [ 9 ] These words perhaps revealed Japanese expectation for a quick solution, which subsequently turned out not to be the case. During this round of talks, there was little indication that Japan had seriously pondered China s idea of joint development, probably because it was so determined to adhere to its position on the median line, citing international conventions to explain the appropriateness of that position. 8

Round 2: May 30 31, 2005, Beijing

China proposed joint development as a provisional measure pending an agreement on the line of separation of the East China Sea. But the proposed joint development would take place only in the areas east of the median line. From Beijing s perspective, this is a concession because these areas belong to China s continental shelf. Japan rejected the idea and demanded China to stop work in the Chunxiao field and hand over geological data. From Tokyo s perspective, the Chinese proposal was exactly in line with the Chinese claim to the continental shelf that extends to the Okinawa Trough, and it would allow Chinese involvement on the Japanese side of the median line without allowing Japanese involvement on the Chinese side of the median line. 9 Based on the median-line concept, Japan would have everything to lose and nothing to gain by accepting this proposal. At the end, both sides could only agree to set up a working group of foreign affairs officials to work on the issue.

Round 3: September 30 October 1, 2005, Tokyo

During this round of talks, Japan demanded China suspend development work in the disputed areas. 10 Japan also proposed joint development of oil and gas fields close to the median line. In other words, Japan wanted joint development of Chunxiao, Duanqiao and Tianwaitian oil and gas fields. It seems that Beijing wanted to limit joint development to the areas east of the median line, areas it considers its continental shelf. Tokyo, on the other hand, wanted to cross the median line into Chinese areas while also opening up the Japanese side of the median line for Chinese involvement. This position of Japan could have been mentioned during the second round of talks, 11 but it became all the more explicit during the third round of talks as judged by Japans post-talks statement. 12 The Chinese side agreed to respond

8 Yoichi Funabashi, an influential Japanese scholar, said shortly before the meeting: First of all, I think, the two sides should agree to respect the median line.Asahi Shimbun, October 13, 2004. Japanese media supported the median line concept, Yomiuri Shimbun, for example, said in its editorial on May 30, 2005 that the government should not compromise its basic stand on the issue of the median line.

9 Yomiuri Shimbun editorial, June 2, 2005.

10 Japanese Foreign Ministry statement, October 1, 2005.

11 Yomiuri Shimbun editorial on June 2, 2005 (i.e., after the second round of talks) explains that Japans basic policy is that joint development projects should cover both Chinese and Japanese sides of the median line with benefits from such projects evenly shared. This is naturally what joint development is for.

12 Japanese Foreign Ministry statement, October 1, 2005.

shared. This is naturally what joint development is for. ” 1 2 Japanese Foreign Ministry statement,


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to Japans proposal at the next round of talks, which they hoped to hold in Beijing at the end of the month. 13 However, China postponed the talks indefinitely because Koizumi visited the Yasukuni Shrine again on October 17, 2005. It was his fifth annual visit to the shrine since he became prime minister in 2001. Beijing showed its displeasure by suspending high-level talks between the two countries, including the China-Japan- Korea trilateral meeting on the sidelines of the Association of Southeast Asian Nations (ASEAN) summit meeting, as well as the oil and gas talks.

Round 4: March 6 7, 2006, Beijing

In early 2006, Japanese Economy, Trade and Industry Minister Nikai Toshihiro visited Beijing and urged China to resume official talks on oil and gas. Nikai was well received in Beijing because he was viewed as not supportive of Koizumis shrine visits. As a result, the talks were reopened, and Sasae Kenichiro led the Japanese delegation to Beijing. Upon arrival in Beijing, he said Japan s position remained unchanged. At the same time, Kodaira Nobuyori, who was also in the delegation, said Japan made a new proposal during the third round of talks possibly Japan s involvement in Chunxiao and he expected a response from China to that proposal and was prepared to discuss any counterproposal from China. 14 After the fourth round of talks, Japanese Foreign Minister Aso Taro told the foreign affairs committee in the Lower House of the Japanese Diet that Japan absolutely cannot accept China s latest proposal on joint development and that if China proceeds with its oil and gas exploration Japan would adopt confrontational measures. In response, Chinese Foreign Ministry spokesman Qin Gang warned Japan against any unilateral move; Qin reiterated that the Chinese drilling activities were carried out in an undisputed offshore area of China. 15

Round 5: May 18, 2006, Tokyo

Again there was no breakthrough. Sasae said after the meeting that both sides have gained further understanding of each other s position but there still remains a gulf. He also said that no new proposals were made at the meeting. Meanwhile, Japanese Foreign Minister Aso Taro said that the two countries could reach an understanding over at least one of the two areas under discussion for development. Aso said that we could find common ground over the north side. [ 3 ] This revealed that the two countries did attempt to carve out specific areas of the East China Sea for joint development, including an area in the north and one in the south. The exact locations were not known but both sides seemed to be pinned down by their controversy over the south area. Since there was no new proposal at this meeting, what both sides did during the meeting was probably responding to the proposals made during

13 Call to Jointly Develop East China Sea Gas and Oil Fields. (2005, October 3). Asahi Shimbun.

14 Japan, China to discuss East China Sea issue. (2006, March 6). China Daily. Retrieved from http://

15 Qin warns against unilateral move (March 17, 2006). World Journal.

from http:// . 1 5 Qin warns against unilateral move (March 17, 2006). World Journal

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previous meetings. Apparently, the talks were picking up momentum and both sides agreed to hold the next round of talks as soon as possible.

Round 6: July 8 9, 2006, Beijing

About 50 days from the last meeting, a new round of talks was held. The momentum itself was a cause for optimism because it pointed to the possibility that both sides had found a common ground on which they could work out an agreement. Unfortunately, this round of talks ended with no concrete result; instead, the two sides agreed to set up a panel of technical experts and a hotline to prevent contingencies in the disputed area. The plan would allow for close liaison between Japan s Coast Guard and China s State Oceanic Administration. After the meeting, Sasae refused to say if Beijing had fully explained its draft of a joint development plan for two separate areas north and south of the Chunxiao field. 16 But it became clearer that one of the areas under discussion was an area north of the Chunxiao field; while the south area was still unknown, it could be an area close to the Diaoyutai/Senkakus islands. Amazingly, three rounds of talks were clustered within four months in 2006. This frequency shows that both sides tried to work out something as they put forward proposals and counterproposals. The precautionary measures agreed upon by the negotiators at this meeting can hardly be considered the ultimate goal pursued by both sides; rather, they caused a great deal of disappointment among observers and well-wishers. At this meeting, both sides also stressed the importance of maintaining stability in the region. Paradoxically, this meeting did not achieve as much as people had expected, but participants in the meeting revealed more details of the meeting than they had done before. There was a weird atmosphere pointing to the possibility that both sides had run into an impasse given the fact that the above-mentioned contents were what they could agree after working frenetically in a short period of time, and then no date was set for the next round of talks. An analysis of the intervals between talks indicates that the talks did pick up momentum in a certain period of time but reached a logjam because they were not quickly resumed (see Table 1 ).

Round 7: March 29, 2007, Tokyo

The seventh round of talks was held in Tokyo on March 29, 2007, almost nine months after the previous round. It was an important round because it was held when Premier Wen Jiabao was preparing for his ice-meltingtrip to Japan, scheduled for April 11 13, 2007. Much hope was placed on this round of talks because everyone thought the Chinese and Japanese officials would like to have something for their leaders to announce and sign in Tokyo. Negotiators emerged from the meeting with no details to reveal, but that was not totally unexpected because, if there was any agreement, it would have to wait until the Wen-Abe summit which would then announce it as a bonus to the improvement

16 Japan, China fail to resolve dispute over gas fields. (2006, July 10). Asahi Shimbun.

a bonus to the improvement 1 6 Japan, China fail to resolve dispute over gas fields.


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of Sino-Japanese relations resulting from Wen s visit to Japan to reciprocate Abe s ice-breaking trip to China in the previous year. Wen s visit would be the first by a Chinese head of state in seven years. What boosted confidence was that the delegates from both sides, after meeting in Tokyo, agreed to hold a technical experts meeting in Beijing, a week before Wen s scheduled visit. Ostensibly, the technical experts meeting, scheduled for April 6, 2007, would finalize details of an agreement for the leaders of both countries to announce.

The Technical Experts Meeting, April 6, 2007

The technical experts meeting could be considered as an ancillary part of the seventh round of talks. Looking at the participants in the meeting, analysts had a cause for optimism because the meeting was no longer dominated by foreign ministry officials. The Japanese team was headed by Hosaka Shin, director of the Petroleum and Natural Gas Division under the Agency for Natural Resources and Energy; and on the Chinese side by officials from the State Development and Reform Commission. 17 The Japanese side also included people from Japan Oil, Gas and Metals National Corporation (JOGMEC), a sign that the talks had moved from the political level to down-to-earth discussion by the technocrats who knew the actual practice of oil and gas exploration. There is reason to believe that if technical experts rather than political officials take the center stage, an agreement is close. After all, after the governments reach some kind of consensus, the actual drilling will still have to be done by such companies as CNOOC and Teikoku. The more those people are represented in talks, the closer an agreement is in hands. JOGMEC is a new organization, established in February 2004. It evolved from the Japan Petroleum Development Corporation (JPDC), which was founded in 1967 to ensure a stable, inexpensive supply of oil and to explore overseas oil resources. In 1972, JPDC added natural gas to its scope of business. In 1978, it became Japan National Oil Corporation (JNOC) and started oil stockpiling. In 2004, it merged with the Metal Mining Agency of Japan (MMAJ) to become JOGMEC. Its self- proclaimed function is to provide financial assistance to support Japanese private companies exploration, production and stockpiling activities in the fields of oil, natural gas and metals. Staff members in JOGMEC develop advanced technol- ogies and supply technical support to Japanese companies. They collect and analyze information about the energy industry and natural resources in the world and disseminate such information to Japanese companies. JOGMEC describes itself as an independent administrative institution, a group of specialists conducting joint surveys and technical collaborations with overseas partners. 18 In other words, these are technical people who would look into the details of joint development plans. Regarding the technical experts, the Japanese team was headed by Hosaka Shin, director of the Petroleum and Gas Division, a division that is one among six under the Natural Resources and Fuel Department, which is one among four under the Agency for Natural Resources and Energy. In other words, he is a junior official, but

17 Japanese Foreign Ministry press release, April 5, 2007. 18 See JOGMECs website at

Foreign Ministry press release, April 5, 2007. 1 8 See JOGMEC ’ s website at

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also a technocrat who would likely discuss concrete plans of oil and gas exploration rather than broad principles of friendship and cooperation. Almost at the same time when the technical experts meeting was held in Beijing, Japanese Senior Vice-Minister for Foreign Affairs Asano Katsuhito claimed that the issue of oil and gas fields in the East China Sea would be the biggest topic during the talks between Abe and Wen; and Yasuhisa Shiozaki, chief cabinet secretary, said that joint development of the oil fields is a consensus between the two countries and that the Japan-China summit meeting on April 11 would also be launched on this basis. 19 On the same day, a major Japanese news agency cited foreign ministry officials as saying that Beijing demanded Tokyo leaves out the Chunxiao field in the dispute and both sides look for other marine areas for joint development, only to be refused by Tokyo, which insisted on including the Chunxiao field for discussion. 20 In hindsight, all signs indicate that the Chunxiao field had become a sticky point, which might have prevented an agreement from being reached.

The Tokyo Summit Meeting, April 11, 2007

Shortly before his trip to Tokyo, Premier Wen Jiabao met with a group of Japanese journalists, and Prime Minister Abe Shinzo met with a group of Chinese journalists. These are customary diplomatic practices. Both leaders stressed the importance of bilateral ties. On the issue of oil and gas exploration in the East China Sea, Wen said it was an important issue involving the vital interests of the two countries, and he hoped a way acceptable to both sides could be found to realize joint development. 21 Abe said he hoped to make the East China Sea a Sea of Peace, Cooperation, and Friendship. 22 The joint statement of Japan and China made during the Tokyo summit contains a section on the East China Sea issue. This section has five points which said both sides would:


persist in the effort of making the East China Sea a Sea of Peace, Cooperation


and Friendship ; conduct joint development as a provisional arrangement until final delimitation


based on the principle of mutual benefit is completed, on the premise that it does not prejudice the position of either side on various issues concerning the law of the sea; hold consultation at higher levels when necessary;


conduct joint development in larger sea areas that are acceptable to both sides;


accelerate the process of consultation and aim to report concrete measures on joint development to the leaders in fall 2007. 23

19 Abe considers visiting China again within this year. (2007, April 7). Ming Pao.

20 China Demands Japan Accommodate Chinas Lone Operation of Gas Field. (2007, April 6). Kyodo News.

21 Wen Jiabao in Beijing meets Japanese journalists. (2007, April 5). Ming Pao.

22 Abe on East China Sea. (April 4, 2007). Yomiuri Shimbun.

23 Japan-China Joint Press Statement at; for Chinese version see Peoples Daily on April 11, 2007.

; for Chinese version see People ’ s Daily on April 11, 2007.


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The content of this statement shows that the technical experts meeting had failed to produce a concrete plan for joint development. What the statement did was this:

both sides reassured the other side that they would remain friendly and cooperative, pursue joint development as previously proclaimed, move the consultation to a higher level when it gets stalled, find agreeable larger waters for joint development, and produce a concrete plan for joint development by late 2007. But these are broad principles and guidelines belonging to the political domain; they do not require technical experts to work out. Along this line of reasoning, the hastily arranged technical experts meeting in Beijing is a mystery. Were they trying to hammer out something for the Tokyo summit but failed to do so in the last minute?

Round 8: May 25, 2007, Beijing

Hu Zhengyue and Sasae Kenichiro continued to head their respective teams. It was a fresh round of meeting after the Tokyo summit, which set the timeframe for finding a plan for joint development by fall 2007. Although the meeting was described by Hu Zhengyue as a new starting point, 24 it was not expected to produce much result in light of the fact that even Premier Wen s visit to Japan had fallen short as an occasion to bring about a concrete agreement. As expected, the talks ended with no breakthrough. Both sides agreed to talk again in late June, and to facilitate dialogue between Japan s Coast Guard and China s State Oceanic Administration so that they can set up some kind of liaison mechanism to prevent contingencies. Sasae said the Chinese had not made any new proposal during this round of talks. 25 However, liaison between Japan s Coast Guard and China s State Oceanic Administration was an idea suggested at Round 6; it was nothing new. 26 In familiar rhetoric, the Chinese Foreign Ministry said after the talks that both parties expounded on their respective views and held in-depth formal consultation and informal discussions. The talks are helpful.27 At the same time, Sasae said the talks had allowed both sides to deepen their understanding of the other side s ideas. He had made similar remarks after each round of talks.

Round 9: June 26, 2007, Tokyo

This meeting was convened one month after the previous round of talks. The same delegations met again but there was no breakthrough. Japanese officials said there was no new proposal from the Chinese side during this round of talks. After the talks, Sasae said that through the debate, both sides increased understanding but had not reached a consensus on the basic points. Also, no date was set for the next round of talks. 28

25 China, Japan plan East China Sea liaison mechanism. (2007, May 26). Wen Hui Po. Retrieved from

26 In low profile, representatives from Japans Coast Guard and Chinas Oceanic Administration met on July 20, 2007. The Chinese team was headed by a woman; no details were revealed.

27 Chinese Foreign Ministry statement. Retrieved from

28 Kyodo News. (2007, June 26).

Ministry statement. Retrieved from . 2 8 Kyodo News . (2007, June 26).

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Round 10: October 11, 2007, Beijing

Almost 3.5 months passed when talks restarted in Beijing. In light of the guidelines requiring both sides to find concrete measures for joint development by fall 2007, the lack of momentum and urgency is strange. It all points to the difficulty of the issue and the hesitation on both sides to yield. Again, Hu and Sasae ended their meeting with no breakthrough.

Round 11: November 14, 2007, Tokyo

Abe Shinzo stepped down as prime minister in September 2007 and was succeeded by Fukuda Yasuo, a leader who was widely viewed as pro-China in Japan and favorably viewed in China as such because his father, Fukuda Takeo, a former Japanese prime minister, signed the Treaty of Peace and Friendship with China in 1978. After taking office, Fukuda vowed to follow Abe s friendly policy toward China and expressed his wish to visit China as soon as possible. Like Wen s visit to Japan in April 2007, there was much hope that Fukuda s visit to China would bring about an opportune occasion on which good news about joint development could be announced. It was in this atmosphere that the 11th round of talks was earnestly watched by anxious observers. Time was running out for 2007 and everyone knew that both sides had set and announced the goal of finding concrete measures for joint development by the end of that year. Despite the stated goal, Hu and Sasae ended their talks with little to announce. Two weeks after the talks, Japanese Foreign Minister Koumura Masahiko met with Chinese Foreign Minister Yang Jiechi in Beijing, apparently to pave the way for Fukuda s visit. Koumura asked Beijing to make concession on the East China Sea issue and said Tokyo did not support Taiwan s bid for UN membership a reference to its referendum; and Yang reiterated Beijing s position on shelving the dispute for joint development. 29 Both sides have no problem in shelving the dispute; they have problem in the form and location for joint development. It became clear that a breakthrough was not forthcoming. Announcement was finally made that Fukuda would visit China from December 27 30, 2007. The fact that his visit could represent a window of opportunity to solve the joint development issue was shown by the increasing interest in the issue as reflected by the questions raised about it during the press conferences at the Chinese Foreign Ministry. The spokesman resorted to familiar script, urging Japan to cooperate, a hint that the no agreement had been made. In fact, METI minister Akira Amari said 10 days before Fukuda s trip to China that it would be unlikely for Tokyo and Beijing to reach a gas accord during the trip, but he also said that such an accord was not a precondition for Fukuda s visit. 30

29 Chinese and Japanese foreign ministers on East China Sea issue. (2007, December 2). Ming Pao.

30 Japan, China unlikely to reach gas accord during Fukuda trip: Amari. (2007, December 18). Kyodo News.

Ming Pao . 3 0 Japan, China unlikely to reach gas accord during Fukuda trip: Amari.


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Fukuda s Beijing Trip: December 27 30, 2007

Fukuda landed in Beijing on December 27, 2007. While in Beijing, he met with Chinese President Hu Jintao, Premier Wen Jiabao, and National People s Congress Chairman Wu Bangguo; he also toured Tianjin and Qufu, the birthplace of Confucius. On December 28, Fukuda and Wen held a summit meeting and, among other things, they reached the following consensus on the East China Sea issue:

(1) continue to uphold the spirit of the five points of consensus reached by the leaders of both countries in April 2007, and make the East China Sea a Sea of Peace, Cooperation and Friendship ; (2) both sides have upgraded the level of consultation, carried out serious and substantive discussions on concrete measures for solving the East China Sea issue, and have obtained positive progress; (3) both sides agree, while maintaining the framework of consultation at the

director-general level, to continue consultation at the vice-minister level when need arises and, proceeding from the overall situation of Sino-Japanese relations and from international law and on the basis of the progress obtained so far, to make joint efforts to reach a consensus on a method of solution as soon as possible; it is in the interest of both China and Japan to properly settle the East China Sea issue, and both sides agree to strive to settle the issue as soon as possible in the process of developing relations between the two countries. 31

Comparing these four points of consensus with the five points reached in April 2007, one sees nothing new. There is no doubt that little progress has been made. Although Fukuda said during the joint press conference with Wen after their summit meeting that concerning the East China Sea issue we have made some progress, and through dialogue we have deepened our mutual understanding and built a relationship of mutual trust, and we are determined to settle the issue as soon as possible,he did not reveal the details of the progress. 32 His words look more like courteous responses than anything else. In fact, had there been any significant progress in the negotiation on the issue, he would have mentioned it in his speech at Peking University and praised it as a sign of cooperation. He did not mention the issue, but mentioned the word oil once.


Japan s Publicity Campaign for the Median Line

Japan has a campaign to publicize the fairness of the median line. This campaign is aimed at the Chinese populace rather than the Chinese negotiators. The median line appeals to the human sense of equality, and Tokyo figures that the more the Chinese

31 Ma, Wenbo & Li, Huizi. (December 28, 2007). Leaders of China and Japan reach new consensus on the East China Sea issue. Xinhua News Agency.

32 Progress made in talks on East China Sea issue: Fukuda. (2007, December 28).Ming Pao.

Xinhua News Agency . 3 2 Progress made in talks on East China Sea issue: Fukuda.

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populace is convinced, the shakier the Chinese position would resemble. The Japanese Embassy in Beijing provides different languages for viewers of its website, but posts explanations on the issue of the median line only in Chinese language, apparently for Chinese viewers. For example, one statement explains that according to the UN Convention on the Law of the Sea, both Japan and China have rights to their respective exclusive economic zones (EEZ) 200 nautical miles from the baselines from which the breadth of the territorial seas (12 nautical miles) of the two states is measured. Since the distance between these baselines on both sides of the East China Sea is less than 400 nautical miles, there is an area of overlapping claims, which necessitate consultation between two states for the purpose of delimitation. According to the UN Convention on the Law of the Sea, as well as relevant examples of international ruling, delimitation in this kind of waters based on a median line would result in a fair resolution. The statement goes on to say that China s stance on natural prolongation of continental shelf is an outdated theory that was used in the 1960 s, a thing that belongs to the last century. According to the provisions of the 1982 UN Convention on the Law of the Sea, and to the examples of international adjudication thereafter, if the distance between two coastal states is less than 400 nautical miles, then the delimitation should not apply the theory of natural prolongation. The statement says that, according to the contemporary international law, the idea that such natural prolongation can reach all the way to the Okinawa Trough is groundless. The statement says that because the marine areas have yet to be demarcated, Japan should at least have sovereignty and jurisdiction over the waters east of the median line. This does not mean Japan has abandoned its rights to the waters west of the median line, but is Japan s interim exercise of sovereignty and jurisdiction over the waters east of the median line pending the demarcation. When Japan and China have yet to demarcate the sea and as China does not recognize Japan s idea of the median line, the fact that Japan has rights over its EEZ and continental shelf 200 nautical miles from the baselines of the breadth of its territorial sea remains unchanged. 33 The embassy not only publicizes Japan s position on the issue, but also carries articles from the Chinese media that are neutral or sympathetic to Japan s position. For example, it carried an article from the Economic Observer, which not only described China s position but also cited the words of a Flinders University scholar that support Japan s position that the Okinawa Trough is only an accidental hollow in the closely connected continental shelves of the two countries. 34 When Tokyo attacked the concept of continental shelf, Australia and East Timor were engaged in a very similar dispute over the gas and oil fields in the Timor Sea, with Australia insisting on the continental shelf principle and East Timor arguing for the median line concept. That dispute intensified in 2004 and was not settled until

33 Embassy of Japan in China, Our Countrys Legal Opinion on Development of Resources in the East China SeaRetrieved March 4, 2007 from

. 3 4 See article at .


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2006 when both sides agreed to put aside their dispute for 50 years and rearranged the shares of revenue from development of the gas and oil fields to be received by the two sides. This article is not intended to discuss the Australian-Timorese dispute; on the other hand, the continental shelf principle is apparently not an outdated reference in international negotiation. In fact, the UN Convention on the Law of the Sea is a long and complicated treaty with 320 articles in 17 parts. However, despite Japan s tendency to cite the Convention to support its median line position, the term median line appears only once in such a huge document of more than 200 pages, and it appears in Article 15, which deals with delimitation of the territorial sea between States with opposite or adjacent coasts, not exclusive economic zone (EEZ), which is dealt with in Article 57. Article 15 says that where the coasts of two States are opposite or adjacent to each other, neither of the two States is entitled, failing agreement between them to the contrary, to extend its territorial sea beyond the median line every point of which is equidistant from the nearest points on the baselines from which the breadth of the territorial seas of each of the two States is measured. Regarding territorial sea, the limit is 12 nautical miles (Article 3); concerning EEZ, the limit is 200 nautical miles. In other words, these are two different things, and Japan has applied the median line concept to EEZ. Although the legal experts in talks should have no problem in recognizing the details, the general public could be easily misled by Japan s portrait of the issue. However, Japan s publicity campaign did not seem to have much effect on the Chinese populace. The English-language China Daily, an official newspaper published in China, allows it readers to air their views on news reports. So far, few readers have supported a compromise, let alone concession, and many were against joint development with Japan. For example, shortly before the seventh round of talks, one reader said in a comment that international and maritime laws are on China s side and asked why should China settle for joint venture which will give Japan what it does not own and deserve? One said that the motive behind this joint venture on China s part is generosity and being nice, but Japan would take advantage of China s generosity. One said if you give the Japanese an inch now, they will want a foot next. And one described Japan as a greedy snake that wanted to swallow up an elephant. 35

China s Rejection of the Median Line Proposal

On July 7, 2004, Deputy Chinese Foreign Minister Wang Yi summoned Japanese Ambassador Koreshige Anami to make a solemn protest. Beijing was responding to Japan s launching of its prospecting activities for energy resources in the seabed in

35 China, Japan to start 7th round of E. China Sea talks. (2007, March 27). China Daily. Retrieved June 27, 2007, from, click on comments of the storyto see comments. Of all the comments, only one supports joint development, and it is from this author, who wanted to test whether readers can freely put their comments there; it proved they can, in a matter of seconds.

who wanted to test whether readers can freely put their comments there; it proved they can,

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the disputed waters east of the median line unilaterally drawn up by Japan. Wang pointed out that the East China Sea has yet to be demarcated, and China and Japan have a dispute on the issue. Wang said that the so-called median line is only a unilateral idea from Japan, and China has never recognized it and cannot recognize it. This kind of method of imposing its own idea on others by the Japanese side will not be accepted by the Chinese side. This kind of provocative behavior is very dangerous and the Chinese side resolutely opposes it. 36 Wang stressed that demarcation of the East China Sea can only be accomplished through negotiations and that this is the only correct choice. China strongly demanded Japan observe standards of international law and immediately stop activities that infringe upon China s sovereignty and interests in the disputed waters. 37 Given such a strong, clearly stated, and persistent position, it is doubtful whether Beijing has any room to back down to do so it will lose face and credibility. It seems likely that even if future cooperation between China and Japan is possible in the East China Sea, both sides will have to find a way to get around the median line concept, which is not likely to be officially accepted by Beijing, although some form of tacit acknowledge of that concept cannot be ruled out.


Both China and Japan need oil and gas to sustain their economic growth. What is at stake is perhaps 7 trillion cubic feet of natural gas and 100 billion barrels of oil in the disputed area. 38 The price of oil has skyrocketed in the past few years and in early 2008 it hit $100 per barrel. Natural gas too is important to China as the country seeks to move from coal-fired power to cleaner energy. In 2003, as far as electricity is concerned, 79% of China s electricity was generated by coal, 15% by hydropower stations, and 3% by oil. During the same year, 23% of Japan s electricity was generated by nuclear power plants, 24% by gas, 13% by oil, 28% by coal, and 10% by hydropower stations. 39 Not only was Japan using less coal for power generation, but its proportion of power sources was more balanced. Having polluted its way to industrial prosperity, China understands the benefit of clean energy and will not easily back down from chances to obtain gas. Pudong in Shanghai, a newly developed district, is being supplied with gas from Pinghu gas field, about 300 kilometers off the shore of China, near the disputed area. Although the talks did not produce concrete results, the pace at which they were held indicates that the overall Japan-China relationship did have an impact on progress. When Koizumi was in office, only six rounds of talks were held within the

36 Chinese Foreign Ministry statement, July 8, 2004. Retrieved July 9, 2004 from

37 Ibid.

38 Faiola. See also International Herald Tribune. (2005, February 24).

39 Calculation based on data from the International Energy Agency, Key World Energy Statistics, 2005.

February 24). 3 9 Calculation based on data from the International Energy Agency, Key World Energy


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nearly two-year period from October 24, 2004 to July 8, 2006 (see Table 1 ). It seems that from March to July 2006 both sides tried to hammer out a deal, but to no avail. Thereafter the momentum was lost. Abe took office in September 2006, and five rounds of talks were rapidly held in a three-month period from March 29, 2007 to June 26, 2007, including the technical experts meeting and the Tokyo summit. After Fukuda took office, another three rounds of talks including the Beijing summit were held before 2007 drew to an end. In other words, eight rounds of talks occurred in nine months in 2007 after Sino-Japanese relations had improved. The fact that talks were not resumed immediately after Abe took office could be explained by the sign that round 6 obviously ended in a disheartening logjam. Viewed from the pace of talks, it is clear that the general relationship between the two countries did play a role. More talks mean more chances for a breakthrough. However, the rigid positions on both sides resulted in many rounds of fruitless talks. One can even assume that after all these talks and other informal communications both sides should have fully understood each other s position. Concessions seem to be the way out, and can be more easily made and explained amid warming ties. Shortly before Fukuda s visit to Beijing, unconfirmed reports from Japanese sources said Tokyo would forego Chunxiao in order to begin joint development in areas near the median line. Cui Tiankai, the Chinese ambassador to Japan, said at the Foreign CorrespondentsClub of Japan on January 18, 2008 that the current focus for consultation is how to realize joint development and the staff from both sides are looking for a practical, effective plan. I believe that with the joint effort from both sides, a consensus on joint development can be reached as soon as possible. As for the legal issues such as demarcation, they can be left for the future to resolve (emphasis mine). 40 His words strongly hinted at the possibility that if anything should happen, joint development would come first, demarcation would follow. This would be a partial solution, or there would be other forms of partial solution, which would likely be announced during high-profile visits or occasions.

Acknowledgements The author would like to thank Professor Howard H. Lentner for commenting on an earlier draft, an anonymous reviewer for advice on re-fining the focus of research, and Teikoku Oil Company for permission to use its exploration map from 2005.


1. Blaker, Michael, Giarra, P. & Vogel, E. 2002. Case Studies in Japanese Negotiating Behavior. Washington, D.C.: U.S. Institute of Peace.

2. Faiola, Anthony. (2005, October 22). Japan-China Oil Dispute Escalates. Washington Post, p. A17.

3. Hasegawa, Kyoko. (2006, May 18). Japan and China fail to bridge gulf on sea dispute. AFP. Retrieved from

4. Johnson, Chalmers A. 1982. MITI and the Japanese Miracle. CA, Stanford: Stanford University Press.

5. Ryall, Julian. (2005, December 2). China, Japan in oil drilling row. Retrieved October 31, 2006, from eres/DF03AA88-0008-4E93-98FC-729BBDB

40 Chinese Embassy in Japans report on Ambassador Cui Tiankais meeting with journalists on January 18, 2008. Retrieved January 19, 2008, from .

journalists on January 18, 2008. Retrieved January 19, 2008, from .

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6. Solomon, Richard H. 1999. Chinese Negotiating Behavior: Pursuing Interests through Old Friends. Washington, D.C.: U.S. Institute of Peace.

7. Takahashi, Kosuke (2004, July 27). Gas and Oil Rivalry in the East China Sea. Asia Times. Retrieved from

8. Tan, Liwen. (2004, July 12). Zhongri haiyu zhuangshu jingji qu fenqi jidai jiujue [Urgent Need to Resolve Dispute over Maritime Exclusive Economic Zones between China and Japan]. Jingji Guancha Bao [The Economic Observer]. Retrieved from /2004/07/10/81/article

9. Watkins, E. 2005. Japan, China Dispute Drilling in East China Sea. Oil & Gas Journal, 103:17, 4042.

Kung-wing Au holds a Ph.D. degree in Political Science from the City University of New York. He has worked as a journalist for a number of newspapers and taught at Drew University in New Jersey, USA. He is adjunct assistant professor of political science, Fordham College at Lincoln Center. Email:

USA. He is adjunct assistant professor of political science, Fordham College at Lincoln Center. Email: