
The catalyst for escalation in this longstanding dispute, which involves claims to sovereignty between China, Japan, and Taiwan, was the announcement by Tokyo on September 10 that it had signed a deal to nationalize three of the islets — Uotsurijima, Kita-Kojima and Minami-Kojima — by purchasing them from a private owner for 2.05 billion Yen ($26 million USD). According to reports, the Japanese government had drawn up multiple plans for its next move, and nationalization, the one ultimately selected by Prime Minister Yoshihiko Noda, was regarded as the least likely to anger Beijing and Taipei — with the exception of Plan A, which was to do nothing. Far more provocative among the eight options considered was the deployment of the Self-Defense Forces (SDF) to the islands around the clock.

No sooner had the announcement been made than protests erupted in various cities across China, and the following day Beijing ordered the cancellation of a scheduled visit by Japanese lawmakers, and linked the decision to the dispute. The Japanese consulate in Shanghai announced on September 14 that four Japanese citizens had been injured in attacks in China. In Taipei, the Ministry of Foreign Affairs summoned Japanese representative Sumio Tarui and recalled its envoy to Tokyo, Shen Ssu-tsun. Around the same time, China announced it had dispatched two China Marine Surveillance (CMS) ships to conduct patrols “near the islets,” while the Taiwan’s Coast Guard Administration (CGA) raised its profile with public demonstrations of escort procedures. Tokyo then announced it would mobilize its coast guard when the CMS vessels reached the archipelago. On September 14, media reported that six Chinese surveillance ships had “briefly entered waters” near the Diaoyutais. By afternoon, all vessels had left following a warning by the Japanese coast guard.

While Chinese media brought the rhetoric to fever-pitch levels, with the Beijing Evening News posting "a link to an article comparing weaponry for a potential with Japan, claiming that China should use the atomic bomb" and protesters holding placards calling on the government to “Declare war on Japan [to] settle new scores and old scores together,” apprehensions of war remain premature.

This is not to say that the situation does not have the potential to escalate. After all, amid speculation of a power struggle within the Chinese Communist Party fueled by the disappearance of President Hu Jintao’s heir apparent, Xi Jinping, from public view since September 1, some China watchers will claim that the crisis serves as a perfect diversion. Talk of settling new and old scores — which go back not only to the events leading up to World War Two, but to China’s first humiliation at the hands of the Japanese, the First Sino-Japanese War of 1894-1895 — will immediately appeal to the resentment and rising nationalism among Chinese, and could be used to direct their energy away from home and towards an external object.

Diplomat Brief Weekly Newsletter N Get briefed on the story of the week, and developing stories to watch across the Asia-Pacific. Get the Newsletter

For his part, Taiwanese President Ma Ying-jeou, whose public support rate has dropped to its lowest level since he came into office in 2008, could also be tempted to distract the public by focusing on external matters, such as the Diaoyutais and the South China Sea territorial dispute, although both issues are largely perceived as irrelevant among Taiwanese.

Enjoying this article? Click here to subscribe for full access. Just $5 a month.

So far, though, it is reasonable to expect that cool heads will prevail, if only for the fact that trade between Asia’s two largest economies would suffer tremendously should war erupt between them. The assumption, therefore, is that the situation remains manageable and that “rational” leaders will make the right decision, which is to de-escalate. Furthermore, though the decision to nationalize the islets may have been controversial, Tokyo is unlikely to have acted without consulting its main security guarantor and security treaty member, the United States. Had Washington strongly opposed the move for fear of its destabilizing effect, it would not have happened, as Tokyo would not want to compromise its alliance over small islets in the East China Sea.

As part of efforts to mitigate the backlash, Japan also dispatched Shinsuke Sugiyama, director general of Asian and Oceanian Affairs Bureau at the Foreign Ministry, to Beijing on September 11 to explain the decision to Chinese officials, while Chief Cabinet Secretary Osamu Fujimura explained that Japan had never used the term “nationalize” to describe the move, and had rather “obtained property we had been leasing."

While the war of word rages, with each side maintaining it will not give an inch in the dispute, the greatest risk — and what is now perhaps keeping investors up at night — is the possibility of small clashes. We have not, for the time being, entered a phase where the conflict risks becoming militarized. The fact that the Chinese navy would have to confront both the largest navy in Asia and the largest navy in the world also serves as a deterrent to escalation, and compels Beijing to explore other means by which to retaliate and satisfy domestic calls for a more muscular response. Therefore, as long as the three claimants limit their operational use to civilian agencies, as opposed to their naval forces, the conflict is unlikely to escalate beyond a point where it can no longer be managed.


Likelier scenarios for the near future, then, involve the possibility of small clashes resulting from accidents or miscommunication.

The dispute has entered a phase where almost every element of the trilateral relationship is perceived through the prism of the Diaoyutai/Senkaku issue. A perfect example of this was news on September 13 that Shinichi Nishimiya, Japan’s newly appointed ambassador to China, had suddenly collapsed in Tokyo. The fact that Japanese police felt it necessary to publicly rule out foul play highlights the need to preempt speculation that China may have had a hand in the affair. What this tells us is that in the current context, minor, even unrelated incidents, can inadvertently lead to escalation.

Meanwhile, all three countries are sending people and vessels to the area, and activists in Hong Kong have indicated they could embark on a second high-profile visit to the islets to uphold China’s sovereignty claim. The further coast guards and fishermen operate from home, the more command-and-control suffers. Self-initiative can aggravate tensions. How the three sides would react if a boat commander decided to ram a Japanese coast guard vessel, or if a Chinese fisherman drowned after his small boat overturns in a maneuver to avoid collision with a larger vessel, is hard to predict.

But as long as the presence is limited to civilian ships, coast guard vessels equipped with nothing more than machine guns, or fishermen wielding small arms or machetes, even clashes would likely remain limited to minor incidents which can still be managed by the political centers. For the time being, neither claimant will dispatch navy vessels there, which dramatically limits the chances of major escalation. Conversely, the deployment of navy ships to the area would be a clear indicator that the conflict has entered a new, and potentially far more perilous, phase.

The U.S. can also play a calming role in this. If reports that emerged in August were true, the U.S. military will use RQ-4 Global Hawk UAVs based in Guam to conduct surveillance over the area, which could help reduce the risks of accidents and therefore could de-escalate tensions. As long as the conflict is handled by civilian agencies, the U.S. is unlikely to extend its assistance to Japan beyond intelligence sharing, and Washington should endeavor to persuade Beijing, Tokyo and Taipei to stay away from military escalation.

As the world watches from the sidelines, we can all hope that rational leaders will prevail over the more extremist elements within their respective countries so that the dispute over the islets remains manageable and does not plunge the region into a costly and unnecessary war. So far, this remains the most likely scenario. However, if we learned anything from the events leading up to World War I, it is that economic interdependence and “rational” leadership alone will sometimes be insufficient to avoid a descent into war.