The transformation of China's economic model and its economic restructuring will further widen bilateral cooperation with Japan in green energy, services, education and healthcare, tourism as well as how to deal with an ageing society.

To boost bilateral cooperation, China and Japan should first strive to achieve an important breakthrough in their bid to forge a free trade area. To facilitate this process, the two countries should enhance bilateral trust to overcome any possible policy obstacles.

The two neighbors should also try to seek new breakthroughs in bilateral cooperation in the green economy. China's commitment to pursue green growth and a green transformation will offer important opportunities for cooperation with Japan in energy, the environment, energy-saving technology, as well as urban construction.

China should also try to learn Japan's experiences in developing its SMEs.

But the key to achieving new breakthroughs in Sino-Japanese economic cooperation lies in the establishment of deepened dialogue mechanisms, consultations and exchanges. The two countries should try to set up a series of such mechanisms in macroeconomic policies to jointly deal with the common global and regional challenges.

During its period of transition, China should learn from Japan's successful modernization, particularly with regard to enhancing the credibility of its enterprises, the protection of intellectual property rights and their overseas investment and foreign exchange management.

Japan should adapt itself to the tendency of increased investment from China's enterprises and change its domestic investment environment. For example, it should offer policy and legislation support for investment from China and help the public correctly understand that the entry of Chinese enterprises will promote mutual benefits.

The future of Asia and its economic rebuilding lies in smooth cooperation between the two countries on the basis of strategic coordination, collaboration and reciprocity.

The author is director of the Hainan-based China Institute for Reform and Development.

(China Daily 09/16/2011 page8)