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Philippine President Ferdinand Marcos Jr., U.S. President Joe Biden and Japan’s Prime Minister Fumio Kishida are pictured ahead of their trilateral summit at the White House in Washington on April 11, 2024.
Manila gets a big boost, but does it matter to Beijing?
Washington and Tokyo promised Manila they would help secure its seas and upgrade its infrastructure at their trilateral summit in Washington on Thursday — all big gestures, but what do they look like from Beijing?
Political winds have shifted against China in the Philippines since President Ferdinand Marcos Jr. came to power in June 2022. His predecessor, Rodrigo Duterte, allegedly sealed a secret deal with China that is now at the center of a dangerous conflict in the South China Sea.
Duterte allegedly agreed not to send reconstruction supplies to a beached ship that Manila uses to control the disputed South Thomas Shoal. Marcos said Wednesday he was “horrified” by any deal that tells Manila what it can do on its own territory, but his attempts to resupply the hulk in March were intercepted by Chinese ships, resulting in injuries. If an incident like this turns deadly, it could spark a war that brings in America and Japan, hence the show of unity in Washington.
Beijing also sees the South Thomas Shoal as a sovereignty issue, and nothing Joe Biden or Fumio Kishida promised today is likely to change China’s tune. China’s Foreign Ministry spokeswoman Mao Ning on Thursday reiterated warnings against violating Beijing’s claims in the South China Sea.
Banknotes of Japanese yen are seen in this illustration picture taken June 15, 2022.
What’s happening to the yen, in plain English
Japan’s yen was trading at just a hair under 152 to the US dollar Wednesday, the weakest rate in 34 years, triggering speculation about a government intervention. But what the heck does that mean?
The background. Japan’s economy has had a weird problem for a long time: deflation. While most central banks worldwide have set high interest rates to combat inflation, Japan only last week ended its controversial negative interest rate policy.
The problem. Your economics textbook says the yen should have risen a bit. Higher interest rates make money more scarce — supply and demand gets to work — and voila.
Not quite.
Wary of spooking consumers, the Bank of Japan emphasized its commitment to keeping borrowing costs low. The US Federal Reserve, meanwhile, has been signaling it will keep interest rates high (and thus, dollars scarce relative to yen) for a while longer. Essentially, investors looking ahead dumped their yen and bought greenbacks.
The politics. A weak yen worsens Prime Minister Fumio Kishida’s already shaky position by making Japan’s imports — particularly energy — more costly. Tokyo may now have to sell dollars and buy yen to prop up its currency, but the optics are poor.
“It's not a great look for the Bank of Japan to take historic steps that should have strengthened the yen and then for the opposite to happen, causing the Ministry of Finance to jawbone the currency to prop it up,” says Eurasia Group analyst David Boling.President Joe Biden Meets With Prime Minister Fumio Kishida meet in the Oval Office of the White House in Washington, DC in January 2023.
US and Japan will upgrade military ties
In the past, US military planners have treated Japan as a forward position for its troops in East Asia, but without much coordination with historically underdeveloped Japanese forces, and this move underscores the deeper investment Japan has made in recent years in its own military capabilities.
It’s also a response to a perceived growing threat from China, including in the Taiwan Strait. (The Kishida administration has referred to Taiwan as Japan’s “extremely crucial partner and an important friend.”)
It signals a stronger stance by the US and its East Asian allies on threats from North Korea. And thanks to the improvements in Japan’s relationship with South Korea, Seoul is not objecting to the upgraded ties as it once might have..
The specifics will take months for senior US and Japanese officials to hash out, but even the initial announcement will raise heart rates in Beijing.
Japan’s Prime Minister Fumio Kihsida speaks to media at the Prime Minister’s office in Tokyo on Oct. 12, 2023.
Japan moves to punish Unification Church
Japan’s government has asked a court to strike the legal status of the Unification Church, which has been at the center of an investigation for over a year following the assassination of former PM Shinzo Abe. Abe’s killer, Tetsuya Yamagami, was outraged that the church had solicited hundreds of thousands of dollars in donations from his mother, ruining the family’s finances.
Yamagami told police he believed Abe was a supporter of the church, and while never a member, Abe did praise the movement’s family values. After the assassination, it was revealed that dozens of ruling Liberal Democratic Party politicians had connections to the church, including Abe’s grandfather. PM Fumio Kishida replaced his defense and economy ministers amid these revelations and passed stricter laws on how religious groups can fundraise.
Will this be the undoing of the church? It stands to lose its tax-exempt status, which it has allegedly exploited as it pressured members into making enormous donations. The government estimates the Church pressured about 1,550 individuals to donate an average of around ¥13 million (roughly $86,000) each.
The church is likely to appeal, and the case may go before Japan’s Supreme Court, but there is good reason to expect the government to win. Courts, after all, have already used the same powers to crack down on an exorcism cult and a terrorist sect.
Whatever goes down in court, the church’s political influence has already evaporated.
“It’s toast,” says Eurasia Group Japan expert David Boling, of the church’s future in Japan, adding that the court case may help Kishida as he eyes possible snap elections. “The Japanese public fully supports this move, so it's a political freebie for Kishida. The LDP wants nothing to do with the Unification Church.”
For more on the Unification Church and its role in Japanese politics, read our deep dive here. And, check out more of Boling’s insights on Kishida’s political outlook here.