TOKYO -- While tensions mount in East Asia over North Korea's arms program, a rift is emerging among Japanese policymakers over how Japan should deal with China, the leading economic and diplomatic player in the region.

Two factions in Prime Minister Shinzo Abe's administration are vying for leadership over this issue.

One faction, led by Liberal Democratic Party Secretary-General Toshihiro Nikai and Takaya Imai, Abe's chief secretary, argues that Japan should focus on economic relations with China. The other camp, mainly China hands within the foreign ministry, emphasizes the security threat posed by China.

The two groups are likely to continue competing in the run-up to 2018, when significant political changes both at home and abroad are brewing.

Economy first

In a June 5 speech in Tokyo, Abe said he is willing to cooperate, albeit under certain conditions, with Chinese President Xi Jinping's Belt and Road Initiative, an economic and diplomatic drive to reshape trade over widespread areas, from the Far East to Europe and Africa. In his speech, Abe said Japan is "ready to extend cooperation" on the plan, provided that China ensures projects are developed in a fair and transparent manner.

Abe's remarks reflected policy coordination between the foreign ministry and the prime minister's office. But many pundits saw the comment as a sign that Imai and other advisers campaigning for expanded economic ties were gaining clout.

The Nikai-Imai faction is pushing for a policy that allows Japan to capitalize on China's growing economic might. "It would be foolish [of Japan] not to try to expand economic exchanges with the world's second largest economy located next door to it," Nikai has said to people around him.

Nikai was once a member of the now-defunct Tanaka faction within the LDP, which was headed by former Prime Minister Kakuei Tanaka, who built Japan's formal diplomatic relationship with China. Nikai is now a leading pro-China politician within the ruling party.

Nikai's key ally is Imai, who accompanied the LDP heavyweight on his trip to Beijing in May to attend an international conference on the Belt and Road Initiative. Imai conveyed to Chinese political leaders Tokyo's wish to improve ties with Beijing.

Underlying the group's push for expanded economic ties is the perception that the vast Chinese market can be a major driver of Japan's economic growth at a time when Abenomics is showing cracks. Improved relations with China, the group maintains, are vital for Japan Inc.'s efforts to boost its fortunes.

Security fears

China hands at the foreign ministry and some like-minded former top ministry officials -- including Shotaro Yachi, secretaty general of the National Security Secretariat -- agree with Nikai and Imai that Japan should seek better relations with China. But they are lobbying for a slightly different approach, as they believe that the threat posed by China's naval expansion in the South China Sea should not be underestimated.

The foreign ministry's stance is underpinned by the fundamental tenet that Japan's foreign policy should always be anchored by its security alliance with the U.S. As a result, the ministry's basic assumption as regards China is that Tokyo's strategy should be aligned with Washington's.

The problem is that the administration of U.S. President Donald Trump has yet to craft a consistent and coherent strategy for managing relations with Beijing.

Foreign ministry policymakers are concerned that Japan's rush to expand economic ties with China under the current circumstances could be risky.

An incident on May 18 lent weight to the ministry's cautious approach. Four China coast guard vessels entered Japanese waters near the disputed Senkaku Islands, deploying a drone in the area for the first time. The Air-Self Defense Force responded by scrambling two F-15 fighter jets around the Japanese-controlled islands, which are also claimed by China.

This happened just two days after Nikai's meeting with Xi in Beijing. China's foreign ministry claimed that the drone was used by the country's media to take photographs.

But the drone only reinforced the majority view within the foreign ministry that Japan cannot possibly expect to rapidly expand economic ties while pursuing a foreign and security policy aimed at thwarting China's military ambitions.

While indicating Tokyo's willingness to support the Belt and Road Initiative, Abe didn't mention the Asian Infrastructure Investment Bank, an international lending body set up by China. A government official says Japan has no plans to join the bank, which would finance the construction of ports and other infrastructure that the Chinese could use for military purposes.

Deputy Prime Minister and Finance Minister Taro Aso is also skeptical about Japan joining the bank.

Abe's speech, which indicated Japan's different responses to Xi's two key programs -- the Belt and Road Initiative and the AIIB -- indicated a compromise between the two factions in his administration.

Political considerations

One important factor affecting Sino-Japanese relations will be the political situation in Japan through 2018. The LDP will hold its leadership election in September 2018, during which Abe will seek his third term as the party's leader.

Meanwhile, the current terms of lower house members will expire in December, meaning other elections will be held by then.

Abe is rumored to be considering holding lower house elections and a national referendum on a constitutional amendment simultaneously in the second half of 2018. The prime minister has pledged to revise the current Constitution by 2020.

But the fate of his constitutional agenda will be determined by the elections, which will also affect Japan's relations with China. Lawmakers close to Nikai say that for Abe to amend Article 9 of the constitution, it will be important to prevent a strong outcry from Japan's neighbors.

Some Abe advisers say improved relations with China would bolster the administration's political clout. But many conservatives supporting Abe contend that Japan should not adopt a weak stance toward China.

The 40th anniversary of the Japan-China peace and friendship treaty -- which established formal diplomatic ties between the two nations -- will be observed in 2018. The government is trying to leverage Abe's 2018 visit to China by scheduling trilateral summit between Japan, China and South Korea, followed by Xi's reciprocal visit to Japan later that year.

These diplomatic visits should help mend relations and complete Abe's global diplomacy as envisioned by the administration.

In China, observers will be focused on how Xi handles the challenges at this autumn's 19th National Congress of the Chinese Communist Party, which is expected to see a reshuffle of the party leadership. It is too early to predict Xi's foreign policy after the party congress.

Likewise, it will be some time before we have a clearer idea about the future of the Japan-China relationship.