For the past six decades, conventional wisdom has correctly deemed the China-Taiwan dispute the most dangerous potential military crisis involving China, Taiwan, Japan, and the United States. A Chinese military attack on Taiwan would bring the United States to the defence of its security partner, Taiwan. Japan, as a US ally and neighbour of Taiwan, would contribute as well.

The Senkaku/Diaoyu islands bring Japan and China, East Asia’s two largest economies and navies, into direct sovereign dispute. The Senkaku islands are covered by the US-Japan security alliance due to Japan’s administration of these islands. There is no US-Taiwan alliance treaty. This presently active dispute brings Japan and Taiwan into direct dispute as Taiwan makes the same claim to these islands as China.

For the first decade of this century, domestic politics in Taiwan, Japan and China contributed to cross-strait relations being the most likely trigger of a major power conflict in East Asia.

In 2000, Taiwan’s independence-leaning Democratic Progressive Party (DPP) took power from the Kuomintang (KMT) for the first time when Chen Shui-bian won the presidential election. President Chen infuriated Beijing by promoting Taiwan’s separate sovereign identity, including after winning re-election with a greater share of the vote in 2004. Taiwan’s constitution, written by the KMT, claims that the Republic of China (Taiwan) is the “real China”.

In 2001, Junichiro Koizumi became Prime Minister of Japan, a position he held until 2006 when Shinzo Abe replaced him. Both embraced stronger ties with Taiwan, a hard-line approach towards China, and a more positive interpretation of Japan’s modern history. The 2006 visit by former Taiwan president and independence firebrand Lee Teng-hui to the Yasukuni Shrine to honour his elder brother entombed there symbolised this new era in Japan-China-Taiwan relations.

In 2002, China’s fourth generation leaders ascended to the top of the Chinese Communist Party as the first set of leaders with the military capacity to implement a forceed reunification of Taiwan. They were also the first generation lacking the legitimacy of fighting in the Communist Revolution against the KMT and the Japanese. In 2005, in response to President Chen’s campaign, Beijing passed the Anti-Secession Law requiring the forceful reunification of Taiwan with China if Taiwan declares independence. Post-war Japan-China relations also suffered that year when thousands of Chinese demonstrated against Japanese revisionist history textbooks.

In the second decade of the 21^st century, domestic politics in China, Japan and Taiwan is threatening to elevate the Senkaku/Diaoyu dispute above cross-strait tensions as East Asia’s most likely (though still unlikely) trigger for a great power conflict.

In September 2010 the dispute flared up when a Chinese fishing trawler collided with a Japanese coast guard vessel leading to the arrest of the Chinese crew. Beijing reacted by limiting crucial rare earth mineral exports to Japan, demanding the immediate release of the captain and crew, and requesting compensation for damage caused to the trawler (the captain and crew were eventually released). The present flare up started when groups of nationalists from Hong Kong, China, Taiwan and Japan visited the islands and heated up further from September 11 when the Japanese government purchased three of the four islands from their Japanese private owners and nationalised them. This sparked hundreds of protests across China, Hong Kong, Taiwan and in countries with large overseas Chinese communities. Chinese authorities banned Japanese companies from a major trade fair in Sichuan province while Japanese businesses have experienced slower customs clearance and visa processing in China.

Since 2010 Chinese domestic politics has increasingly focused on the transition to the fifth generation of leaders with Xi Jinping expected to take over from Hu Jintao as Party Secretary General later this year. In this same period, China, with its ever-growing military capabilities, has become more assertive in prosecuting its disputed sovereign claims from the Spratly and Paracel Islands in the South China Sea to the Ieo island and the Senkaku/Diaoyu islands in the East China Sea.

With Hu Jintao attempting to guarantee his influence over the party after he steps down and Xi Jinping doing the same for when he steps up, the timing of the present flare up is particularly sensitive. In 2010, Hu Jintao remained largely quiet, leaving it to Premier Wen Jiabao to criticise Japan. This time both Hu and Xi have publicly lambasted Japan’s position. Xi and the other fifth generation leaders will unlikely ever be in a strong enough position to take a more conciliatory approach to the dispute and Japan-China relations as Deng Xiaoping did in 1978 that China would do nothing to contest Japan’s claim to the islands while he was in power

Japan-China relations appeared to be on the mend in 2009 when the Democratic Party of Japan (DPJ) won power from the conservative Liberal Democratic Party (LDP). The victors called for closer relations with China and more autonomoy from the United States. The 2010 collision between the Chinese trawler and Japanese Coast Guard vessel and the release of the captain and crew though inflamed Japanese public opinion. Prime Minister Naoto Kan was harshly criticised for bowing to Chinese pressure and conservative nationalist voices in Japan gained in influence. Partially in response to the 2010 Senkaku crisis, Japan’s 2011 National Defence Policy Guidelines call for enhanced naval and air capabilities, a rebalancing of forces from the north of Japan to the south and a focus on the defence of Japan’s remote islands.

With Prime Minister Noda and the DPJ expected to lose the next election to the LDP, Tokyo is in no position to compromise over the present dispute. Conservative voices in Japan have taken advantage of the present flare up. Tokyo’s nationalist mayor, Shintaro Ishihara, forced Noda’s administration to purchase the three Senkaku islands to stop the Tokyo Metropolitan government from doing so. Both major parties in Japan now are committed to a stronger US-Japan alliance, a steadfast position on Japan’s sovereignty over the Senkakus and a military doctrine focused on the threat from China.

The 2008 return to power of the KMT in Taiwan means that Taipei is committed to closer relations with China and a return to the “1992 Consensus”, in which China and Taiwan both recognise that there is “one China with differing interpretations.” The DPP does not recognise this “Consensus”. The flare ups in the Senkaku/Diaoyu islands’ dispute have provided Taipei the opportunity to reinforce, in line with the 1992 Consensus, the common territorial claims of China and Taiwan to their domestic Taiwan, mainland Chinese, Japanese and wider international audiences.

In 2010, Taipei backed Beijing’s criticism of Japan’s arrest of the trawler crew. On 25 September this year, Taiwan sent 12 Coast Guard vessels to protect 75 fishing vessels from Taiwan that entered the waters of the disputed islands. These coast guard vessels engaged their Japanese counterparts in a bout of water cannoning before the flotilla from Taiwan departed. The Taiwan flotilla gained wide and positive coverage in China becoming the second most visited news story on China’s Baidu search engine onthat day.

The increasingly tense security relationship between China and Japan is transforming the Senkaku/Diaoyu islands’ dispute from a latent problem into a continuing bilateral crisis with frequent flare-ups and more acrimonious responses. It is also pushing Japan to seek closer security ties with the United States and greater national military capabilities. A very similar story of increased tension and acrimony is developing in the South China Sea. China’s growing military might and wealth and its unresolved territorial disputes are combining to undermine its strategic goals of a “harmonious region” supporting China’s economic development and a declining role for the United States in East Asia.

Cross-strait relations remain the most significant of these disputes. Yet, the Senkaku/Diayou one brings China into direct dispute with its wealthiest and strongest neighbour and the one that is the most important for China’s economy. While cross-strait relation may be eased in the future by a political agreement between Beijing and Taipei, it is very hard to see how Tokyo and Beijing could reach a political agreement over the Senkaku/Diaoyu islands’ dispute. These uninhabited islands and rocks will continue to play a large role in East Asian insecurity and place the leaders of Japan and China at loggerheads. 

The views expressed in this article are the author's own and do not necessarily reflect 51³Ô¹Ï’s editorial policy.

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Japan’s Lost Identity

Modern Japan’s international identity has been intimately tied to the country’s rivalry with China in both domestic and external affairs. Traditionally, Japan used imperial China as its political model. In the year 710, Japan established its first permanent national capital, Nara, as a direct replica of the Chinese capital city of that time. Over a millennium later, the ability of Western powers to “break down the door” of imperial China served as a salutary warning to the Japanese. Modern Japan’s first military engagement came in 1894, less than 30 years after the overthrow of the Tokugawa shogunate, when it decisively defeated imperial China to win control of the Korean peninsula.

This war, the first of the two Sino-Japanese Wars, symbolized the replacement of China by Japan as Asia’s most powerful nation. A decade later, Japan’s victory over Russia in a naval battle symbolized Japan’s entry into the first rank of global powers. Japan’s traditional role as Asia’s leading power and the only Asian power with a seat at the table of global power  has been a key source of modern Japan’s self-identity, pride and the way it has been perceived by others. As a result, many in the Japanese political and economic elite see their country as the only to be Asian culturally while maintaining material strength on the level of Western powers. For the rest of the world, Japan’s economic dynamism and cultural distinctness led to a similar hybrid view of Japan, both Asian and Western.

For decades, Japan was Asia’s only advanced economy, serving as a model for its neighbors. It is still the only Asian economy represented in the G7, the “informal steering committee of the global economy.” Japan’s economic success helped create an integrated Asia through trade and investment flows. Moreover, for most Asian countries, Japan has been the leading Asian export market and source for imports.

Today, this is either no longer true or not as significant. China is Asia’s largest and the world’s second-largest national economy, a fact that triggers global fascination and talk of a new geopolitical model, the “Beijing Consensus.” China’s hothouse economy now acts as the leading source of exports, and destination for imports for most other Asian economies. In the 1980s and early 1990s, the US and Europe were concerned about the potential for Japanese economic domination, hammering Japan over its mercantilist exchange rate policy. But today, China, with a population ten times that of Japan and with much more scope to continue to industrialize, stirs similar fears and policy reactions across the West.

When postwar Tokyo hosted the 1964 Olympics, Japan was globally seen as the face of modern, dynamic and exotic Asia. In 2008, China played host to the games and — while topping the medal tally — had taken over that mantle. Later that same year, President George W. Bush called the first leaders’ meeting of the G20, which includes China, a move that helped this larger and more representative group rise in importance over its creator, the G7. For Japan, the elevation of the G20 to leaders level and its apparent eclipsing of the G7 came at a particularly inopportune time as its economy had been battered much more severely than China’s by the global financial crisis. The elevation of the broader G20  coincided with a growing discussion of a new “G2” relationship between the China and the US. The G2 idea triggered great consternation in Japan because it reinforced a sense of the loss of Japan’s image as Asia’s leading economy and the United States’ most important relationship in Asia.

Japan’s Strategic Fears

China’s economic rise is unsettling Japan in more concrete ways than the erosion of its proud self-image. The impressive pace of China industrialization and economic dynamism is providing the state with the means for rapid military modernization. While Japanese annual defense spending has remained under 1 percent of GDP for decades, China’s officially announced annual defense spending has witnessed annual double-digit increases in nine of the last ten years. In 2008, the Stockholm International Peace Research Institute (SIPRI) estimated that China boasted the world’s second-largest defense budget, now over twice the size of that of Japan. According to polling data, the share of Japanese people who perceive China as a threat to Japan has quadrupled in the past decade, with North Korea the only country viewed as more threatening.

In the last few years, this sense of fear has been aggravated by increasingly common incidents in areas of sovereign disputes between China and Japan in the East China Sea. One example is the series of Chinese naval convoys passing close by the Okinotori islet, which Japan claims as sovereign territory but China does not recognize as such. Furthermore, just days after Japan’s devastating triple disaster centered in Fukushima, a Chinese maritime helicopter flew within meters of a Japanese naval vessel in the vicinity of the disputed Senkaku/Diaoyu Islands, sparking anger in a shaken Japan and the lodging of a formal diplomatic protest. An earlier flare-up in the same area, this time triggered by a collision between a Chinese fishing trawler and a Japanese coast guard vessel, led the US to reassure Japan and warn China that Article 5 of the US-Japan alliance covers the Senkaku islands as Japanese administered territories. Hence, any Chinese attempt to take over the islands would trigger a combined US-Japan response.

The People’s Liberation Army’s continued expansion and modernization of its nuclear arsenal is a further source of fear for Japanese defense planners and is leading to a questioning of Japan’s long-standing “Three Nuclear Nos”: no possession, production or permitting the introduction of nuclear weapons into Japan. China is one of the few nuclear-armed states expanding its arsenal, and its focus on short- and medium-range weapons are of particular for China’s many neighbors.

It is not only China’s nuclear advances that are stoking fear in Japan. The perception of a threat emanating from North Korea has deepened considerably in Japan since the mid-1990s. In 1996, North Korea test-fired missiles over Japanese territory and a decade later a nuclear device. In 2011, North Korea sank a South Korean naval vessel and shelled South Korean civilians on a disputed island. In all of these cases, China, North Korea’s only ally, has provided it with steadfast diplomatic support and used its veto-wielding seat in the United Nations Security Council to shield North Korea from the consequences of its hostile acts. While Japan’s fear of China’s military intentions and capabilities are growing, so are its fears of China’s continued embrace of North Korea. These fears have already pushed Japan to strengthen its strategic and diplomatic ties with the United States, India, South Korea, Australia and other partners that feel equally uneasy when it comes to China’s future strategic intentions. In 2007, Japan signed a Joint Declaration on Security Cooperation with Australia that is now backed by a deference logistics treaty. This year, Japan again joined the United States and India in the Malabar series of naval exercises that were held off the coast of Okinawa for the first time.   

 Japan’s Fragile Economy

While China’s re-emergence as Asia’s leading power is for the most part diplomatically and strategically disadvantageous for Japan, China’s economic dynamism is of great benefit to Japan’s struggling economy. China’s economic rise coincides with the aging of Japan’s population and the economic maturation of Japan’s domestic economy.

Fortunately for both, the world’s second- and third-largest economies are quite complementary. In 2004, China topped the United States as Japan’s largest trading partner. Today, roughly 20 percent of Japan’s exports go to China while Japan receives the same share of its total imports from its giant neighbor. Last year, Japan’s total trade with China grew an impressive 30 percent year on year, with Japanese exports outpacing this at 36 percent growth. Japan’s gross national product as a whole grew at 3.9 percent in 2010. Japan’s ambassador to China, former general trading company executive Uichiro Niwa, suggested that Japanese firms affected by the triple disaster shift production to China. The last trilateral meeting between South Korea, Japan and China focused on freer trade and investment flows among the three countries as a way of helping Japan recover.

The commercial interests of Japan’s largest and most successful manufacturing firms are pressing for increased cooperation with China. Still, Japan’s security concerns and psychological challenges in letting go of its self-image as Asia’s leader press it in the opposite direction. Not surprisingly, a growing debate has arisen in Japan about how to manage relations with its powerful neighbor. From 2001 to 2006, diplomatic and security tensions prevented Chinese and Japanese leaders from meeting bilaterally. At the same time, though, Japan’s economy became increasingly intertwined with China’s. As a result, Keidanren, Japan’s most important business association, made a very rare public intervention and called for a change in Tokyo’s China policy. But the rising number of clashes between the two powers and the public reactions these spark in both countries make such rapprochement a tall task.

Persisting Tensions

It is telling that the first change of government in Japan in over 50 years, from a conservative to a left-leaning government in 2009, has failed to reduce tensions between China and Japan, particularly on the security front. The 2010 National Defense Policy Guidelines call on Japan to boost its force projection capabilities, focus more on the defense of remote islands such as the Senkakus and transfer forces from northern Japan facing Russia to southern Japan and the East China Sea.

China’s rise to Asian supremacy is simultaneously triggering a sense of loss, fear and hope in Japan. The confusion plaguing the Japanese national psyche coincides with significant social and political changes in the face of the country’s economic stagnation and worrying demographic and fiscal trajectories. One should not expect clarity from Japan when it comes to addressing the rise of China. Instead, one can expect contending pressures from the business sector to deepen ties with China and from the strategic community to be decidedly wary of China. The only certainty is that Chinese-Japanese relations will play a central part in Japanese popular politics for years to come. 

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