How a minor China-Japan fishing dispute blew into a diplomatic hurricane

What began as a routine fisheries dispute near a string of uninhabited rocky islets in the East China Sea has blown into a major diplomatic storm between Asia’s two economic powerhouses, both of them hung up on the sensitive issues of national sovereignty and international status.

Neither the Chinese nor the Japanese governments appear ready to lose face in the standoff, nor to risk disappointing their easily angered publics. “In these circumstances,” says Takashi Inogushi, head of the University of Niigata in Japan, “it is very difficult for either side to do anything” to break the stalemate.

Beijing has been relentlessly raising the stakes in its bid to win the release of a Chinese trawler captain held by the Japanese authorities for the past two weeks. Prime Minister Wen Jiabao warned this week that “if Japan persists in its mistake, China will take further action and the Japanese side shall bear all the consequences.”

Tokyo, meanwhile, has insisted on its legal right to investigate allegations that the captain deliberately rammed two Japanese Coast Guard patrol boats, but is calling for negotiations.

“Making waves over an accidental incident runs counter to the national interest of both countries” the new Japanese Foreign Minister Seiji Maehara said this week.

China has turned down invitations to talk, saying that only the immediate release of the fishing captain can resolve the issue.

The issue behind the issue

Though Japan administers the disputed islands, known in Chinese as the Diaoyu and in Japanese as the Senkaku, China also claims them. The two sides agreed 30 years ago to shelve the territorial dispute in order to cooperate on fisheries and gas-drilling projects, but the current row illustrates how easily and quickly Sino-Japanese relations can deteriorate.

China is especially sensitive to questions of sovereignty, whether they be raised in Tibet, Taiwan, or islands that Beijing claims throughout the oceans that lap its eastern shores.

And with China’s leaders beginning to jockey for position in advance of the 2012 Communist Party Congress that will select the next leadership, “this is no time to be seen as being conciliatory,” says Drew Thompson, head of China studies at the Nixon Center in Washington. “The safest position is to be a hard-liner with regard to outside actors,” he adds.

Similarly, in Tokyo, “it is politically important not to appear soft on China” for the ruling Democratic Party of Japan, which is struggling in the polls, says Tobias Harris, who runs the ObservingJapan.com website. “The government is unwilling to bend on its position.”

The sovereignty dispute is particularly delicate in the wake of China’s emergence as the second-largest economy in the world, overtaking Japan, according to figures released last month.

China has done nothing to salve Japan’s bruised national ego; indeed, for the past year, Beijing has been asserting itself more confidently in international affairs, alarming some of its neighbors.

This stance is unwise, warns Shen Dingli, a prominent Chinese commentator on foreign affairs, because Beijing risks developing a reputation for arrogance. “China should avoid being seen to say, ‘when they are strong we yield, when we are powerful we confront,’ ” he suggests.

Washington's role?

Indeed, China’s aggressive pursuit of sovereignty claims around islands in the South China Sea already appears to have sparked a backlash, drawing Washington into a more active regional role.

Some members of the Association of South East Asian Nations (ASEAN) have reacted warmly to US offers of assistance in resolving the sovereignty disputes, to Beijing’s strongly voiced displeasure.

China’s new stance has also prompted Washington to reassure Tokyo of its steadfastness, although the US-Japanese alliance has come under strain over differences about where to relocate a US military base.

US efforts to improve ties with China “must go through Tokyo,” Vice President Joe Biden said this week.

No spiraling out of control here

Nor can Chinese military leaders have missed plans by the US and Japanese militaries to stage exercises in December mimicking a joint effort to retake an isolated string of islands from a putative occupier.

It is hard to imagine the current dispute spiraling out of control toward military confrontation, or even that it will cause lasting damage to the two neighbors’ increasingly important trade and investment relationship. China is Japan’s biggest trading partner, and Japan is China’s third largest source of foreign investment.

“We are so closely tied by technology, economics, and trade nowadays that it would be very hard to disentangle the two sides for any length of time,” says Professor Inogushi of the University of Niigata.

But the angry rhetoric could raise the prospect of an arms race. A few hours after taking over as foreign minister last week, Mr. Maehara said he was “concerned” by China’s rising defense budget. And anonymous Japanese Defense Ministry officials this week spoke of increasing the size of the Japanese Self Defense Force for the first time since 1972, and stationing more troops near the Senkaku islands.

“So far, the Japanese public has not translated its concerns about China into demands for more military spending,” says Mr. Harris. “That is the one thing keeping the peace. But if the public decides that the way to respond to China is to strengthen Japan’s military capabilities, then anything goes.”