In the wake of the politically-charged
Diaoyu/Senkaku island territorial dispute, anti-Japan nationalism is going viral in China, sweeping across over 100 cities in China as well as Chinese communities overseas. This coincides with the anniversary of the 9.18
(September 18) incident in 1931 when Japane began the invasion of China. Click here

China has become Japan's largest trading partner and is reliant on
China as its largest market of Japanese goods manufactured in China.
This benefits from a high-yen policy which costs less
in yen for its Chinese investment and puts more spending power in the
hands of Japan's aging population. So economicallyJapan stands to lose a
great deal in the event of an all-out confrontation with China.

All the parties concerned – Japan, China and the United States – know full well
that an all-out war should be ruled out as none wants one or can afford
it.

However, a weakened Japanese Noda adminstration, fighting
for political survival against right-wing activism, is unlikely to back
down. Moreover, while the U.S. has repeatedly declared its neutrality
on  sovereignty over the disputed island, it has affirmed the
application of the U.S -Japan Security Treaty to the disputed island
which Japan claims is under its administration.

While
anti-Japanese nationalism may come in handy to boost China's territorial
claim, it would not be in China's interest to allow it to run riot.
This is because social stability is paramount during China's imminent
leadership transition at a time of weakening Chinese and global
economies.

But geopolitically, Japana's right-wing politics
seems to be handing over to China the best opportunity in decades of
settling this territorial dispute once for all.

The current row
with Japan and other rival territorial claimants provides perfect
legitimacy for China to tighten military and adminstrative coverage of
claimed territories in the South China Sea, which comprise China's vital
sea lanes.

This also opens up the opportunity to set the records straight on the sovereignty issue. That's why China
has now submitted historical documents supporting claimed lines of
territorial demarcation to the United Nations.

The historical background is explained in a recent article in Foreign Policy – "Why the Japan-China island dispute is an American problem" Click here

If Japan keeps up the right-wing rhetoric, popular anger in China,
already at boling point by recalling Japan's imperial past, could well
push China to consider more draconian retaliatory measures e.g.
unilateral specifc trade sanctions such as export of rare earths, in
addition to curbing business opportunities of benefit to the Japanese
economy.

All of this seems rather pointless over some small and unattractive island outcrop in the South China Sea.

But besides hidden gas and oil reserves, what is really at stake is the
battle over geopolitical influence over these sea lanes between the
world's extant superpower and its perceived challenger. Added to this is
the no-small-matter of China's national pride in territorial integrity
traumatized by centuries of foreign aggression.

In any case,
this unstable standoff between Japan and China is unsustainable,
especially for an economically-weakened Japan. Chances are that some
sort of an accommodation will be worked out balancing the interests on
all sides, including no less America's interests in the Asia-Pacific. See my Op-ed article Discord in Asia in the South China Morning Post here.


Stopping the row from escalating seems to suit all parties and necessity
is often the mother of invention. Perhaps the current visit of American
Defence Secretary Panetta to Beijing would at least set the tone for a
more meaningful tripartite dialogue.