Communist China, like Big Brother Russia, has set itself a big economic target. When Khrushchev talks of overtaking the U.S. in farm products by 1975, Peking tells of overtaking Britain industrially in 15 years. But Red China's real industrial rival sits just across the Yellow Sea. Last week Peking declared open economic warfare on Japan, the one Asian nation capable of challenging the Red drive toward economic domination in greater East Asia.
Peking has such a healthy respect for capitalist Japan's postwar buildup that for a long time the Chinese Reds fondly hoped that Japan could be lured into a kind of neutralist status. Whatever hopes China had, they all but disappeared three months ago when conservative Premier Nobusuke Kishi clearly indicated that his Japanese government had no intention of granting diplomatic recognition to Peking, and would not fall over itself to trade with the mainland Reds. Peking turned from sweet to sour. The Chinese Reds tried blatantly to defeat Kishi in last May's elections (TIME, June 2) and failed miserably.
Last week, watching Japanese diplomacy, trade, banking, shipping, scholarship and technology fanning across Southeast Asia once again, Peking decided to put the squeeze on Tokyo where it hurts. Having broken all trade, fishing and cultural relations with Japan, the Chinese Reds called on all the 13 million overseas Chinese living in Southeast Asia (most of them distributors and shopkeepers) to boycott Japanese products and sever all business connections with Japan. The Reds also snapped off repatriation of some 30,000 Japanese nationals still held in China (although 65 Japanese Communists were shipped back home from China under assumed names to foment trouble). Peking's propaganda organs, which previously had confined themselves to attacks on "the idiot Kishi," suddenly recalled Japan's wartime atrocities —"killings, arson, pillage, rape, insults, beastly activities." The Peking People's Daily accused Kishi's "monopoly capitalist" government of "imperialism and militarism."
Victims of Dumping. But it was not names that hurt the Japanese so much as the possibility of Peking's trade rivalry in Southeast Asia. Like island Britain, island Japan (pop. 90 million) must trade to survive. In a speech to Osaka businessmen, Kishi's brother, Finance Minister Eisaku Sato, said that to meet "the sudden intensifying competition from Red China," he wanted to extend yen loans to Southeast Asian countries and permit them to pay for Japanese exports on the easy installment plan. He also called for a speedup in Japan's payment of $700 million in World War II reparations to the Philippines, Burma and Indonesia to put these once occupied nations in a better mood to "Buy Japanese." In an ironic twist of history, the Japanese, who once angered the West with their dumping practices and their phony "made in U.S.A." and "made in England" labels, were being seriously undercut by a dumping campaign launched from Peking.