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The China-Japan conflict over the sovereignty of Diaoyu/Senkaku chain of islands in the East China Sea is almost over a month old now. Such confrontations are not new. But none before lasted so long. This time, the two countries clashed at the highest level. Both have started gathering support from friendly countries to their point of view. Neither side is willing to stand down even an inch. Full military show of flag has come into play.

A Chinese Defence Ministry spokesman Yang Yujun confirmed (Beijing, Sept. 26), that Chinese naval ships had carried out patrolling and training exercise in the waters off the Diaoyu (in Chinese) / Senkaku (in Japanese) islands recently. The confirmation came through the Chinese official news agency Xinhua of September 27. It would be of concern to note that the Chinese have raised their statement from the fishing boats and maritime security vessels to the level of the PLA navy.

China has cautioned Japan at the highest levels to withdraw from steps that Tokyo has taken over the islands issue that is, withdraw the Japanese government’s purchase of the Senkaku islands from private Japanese owners. Chinese President Hu Jintao conveyed this to Japanese Prime Minister Yoshihito Noda on the sidelines of the APEC Summit on Vladivostok. On the sidelines of the UN General Assembly meeting in New York in the last week of September Chinese Foreign Minister Yang Jiachi repeated these very words to Japanese Foreign Minister Gemba.

The Japanese continue to hold their stated position that there is no dispute over the Senkaku islands. This was clearly reiterated by Prime Minister Noda on the sidelines of UNGA in New York. But they want to continue to talk with China to prevent the situation going out of hand. They also sent their Vice Foreign Minister to China for talks, but the stalemate remained.

The issue is well known, but to mention it briefly to clarify the context. When the Japanese defeated China in the 1895 China-Japan war, Japan took possession of these contested islands. Then the history become complicated. China claims that the Cairo and Potsdam declarations of 1940s gave back these islands to China. But the US, in the 1951 Treaty of San Francisco the US handed back Okinawa to Japan along with the Senkaku chain. In the 1960 US-Japan security treaty the US was obligated to come to Japan’s aid if Japan was attacked. The ambit of this treaty included the Senkaku islands. The Chinese strongly oppose this part of the treaty. This treaty does not have the ambiguity of 1978 USA’s Taiwan Relations Act (TRA) which also obliged the US to come to Taiwan’s assistance if attacked. The TRA is open to interpretation by US Presidential determination, while the US-Japan security treaty does not.

At the current stage, political compulsions have contributed the two countries adopting rigid positions. In Japan, Prime Minister Noda has been under challenge from inside his own party, the Democratic Party of Japan (DPJ). The DPJ is also facing threat from the opposition LDP which ruled most of post-war Japan. Shintaro Abe, a professed hardliner on China, recently won the leadership of LDP. The LDP is poised to win the Lower House in the coming elections. In that case Abe will be Japan’s Prime Minister. Beijing is very much aware of it and would like to close the islands issue in its favour before that happens.

The Chinese Communist Party (CCP) went through serious political scandals this year which has weakened the party to an extent. It exacerbated factional divide. But with the announcement of November 08 as the commencement of the 18th congress of the CCP, it appears difference has been resolved and power sharing agreed to. The People’s Liberation Army (PLA) has over the recent years gained a significant say, much more than the Chinese Foreign Ministry, over foreign relations especially in the neighbourhood, territorial issues and strategic planning. The PLA is a major player in internal politics. Hence, the Chinese leadership cannot ignore its aggressive stance on these issues.

There are signs of political evolution in China, especially with the aid of technology, the internet. This is in a fledging state, but there are also indications that the authorities are beginning fight a losing battle in trying to block them. The reason is that the new breed are educated and technologically savvy. They attack the Party in their blogs. But they are also mutated to ultra nationalism, putting pressure on the authorities to act on national cause.

The anti-Japanese demonstrations were engineered by the authorities. This was for a limited purpose of warning Japan. The Japanese embassy in Beijing, consulates in other parts of the country, Japanese assets and even manufacturing factories have been attacked by these nationalist demonstrators. Some of them even demand that China should attack Japan militarily.

Initially, the Chinese Party mouthpiece, the People’s Daily wrote that in a break up of relations China will be hurt economically, but Japan would be severally damaged and taken back 20 years when it had slumped to a recession. The message from the top leadership was that China could sustain the impact and Japan could not. This encouraged more demonstrators.

Very recently, however, the Chinese authorities appear to have recalculated the effect of an economic war with Japan. If Japanese enterprises in China close down, and some of them especially in the automobile sector have suspended production, tens of thousands of workers will be rendered jobless. Already, global economic slowdown, especially in the USA and Europe, have hurt China’s exports, and factories are closing down contributing to the already burgeoning unemployment market. China’s more than $3 trillion forex reserve is also a double edged sword. They cannot redeem this as the dollar, euro and yen will fall. An FDI and export dependent economy could crash. That can spell Armageddon for China. The Chinese leaders are well aware of this scenario.

A clash between the world’s second largest economy and the third largest economy cannot remain localised. First, in per capita terms China is nowhere in the vicinity of Japan. The rich is China are not “glorious”. They are all highly corrupt, and wealth in China is not a product of market distribution but corruption linked to power.

If China tries to seriously hurt Japan’s economy, the impact will be both regional and global. China is nowhere near Japan’s high technology products.

The impact will come full circle and come back to hit China. Japan’s economy may be sluggish, but intrinsically it is far stronger than that of China’s.

Yuan Xuetong, a renowned hardliner foreign policy strategist of China who influences decisions, is of the view that a military conflict between China and Japan is inevitable as neither side is in a position to compromise. Japan’s Prime Minister Noda has openly stated that his country’s ocean and territories are being threatened and he must protect them. China holds Japan has stolen Chinese territory and must give them back.

China has been trying to emerge as the emphatic power pole in Asia. The two countries that stand in the path of this agenda are Japan and India. There is a growing support in China for the view that Deng Xiaoping directive of keeping a low profile should be discarded, and its economic and military power demonstrated.

The situation has come to a precipice, almost. Despite the US-Japan security agreement it not clear how the US will act in case of a military confrontation. If Japan is forced to concede by the US because of interests with China, destruction of the Asian Century will be written in bold letters. On this one winning step, China will bulldoze claimants to the Spratly islands in the South China Sea, mainly the Philippines and Vietnam. It has already deployed reconnaissance drones over the Philippines, and the Chinese Defense Ministry has dared Manila to shoot them down. This is a clear demonstration of power to achieve set goals. At the end of this series will be India. Chinese claim on Arunachal Pradesh, especially Tawang is alive. It already refers to Arunachal Pradesh as South Tibet. Chinese roads and infrastructure along the Indian border have been constructed for three decades at least. The railway has come to Lhasa from the mainland and exercise of transportation of heavy weapons, arms and ammunition was conducted in 2011. In September this year the PLA air force conducted exercises over Tibetan mountains. Para-troops, live ammunition exercises in Tibet have become a regular future.

Certainly, China is not going to attack India in 2012. It has to consolidate its sea board. After that, the pressure on India will come – 2014-15?

China’s approach to India may be on the following lines: (a) boundary/border/territorial issues are separate (b) trade and economic exchanges, as long as they are in China’s favour, should not be influenced by (a); (c) delink India-US relations that can counter China. There will be many buyers in India for this approach.

The key to the stability and balance in the Asia Pacific Region is the US. Its return to this region known as the Asia Pivot under President Barack Obama’s strategic foresight has disturbed Beijing’s strategic calculations. Washington is gradually establishing military relations with its erstwhile enemy Vietnam. It has a security agreement with the Philippines, and has conducted pointed naval exercises with it, to get back islands captured by an enemy (read China). Washington is still not invoking the 1960 security agreement with Japan and, without an offer of mediation between China and Japan is encouraging the two sides to resolve the issue peacefully. At the same time, the US has quietly moved six M-2 Osprey aircraft to Okinawa overlooking the Senkaku islands. The Ospreys are a class of aircraft of its kind in the world, and highly effective in short warfare strike. Basically, China has been cautioned not to militarize the Senkaku issue.

The onus is on China now, as is the future of the Asia-Pacific Region. The upcoming new Chinese leadership will have to take a call. Reopening old wounds, whether real or politically concocted, can lead to disaster.

(The writer, Mr.Bhaskar Roy, is an eminent China analyst based in New Delhi;

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