China is Japan’s largest single trading partner, so any cooling in Sino-Japanese relations has the potential to have a significant impact on Japan’s economy. Relations between the two nations have been strained in recent months over a dispute about the sovereignty of uninhabited islands in the East China Sea, claimed by both sides (and Taiwan). Furthermore, the history of Japan’s imperial adventures in what is now the People’s Republic of China, sit uneasily with China and other Asian nations which were invaded during the conflict.
Prime Minister Abe came to power promising economic regeneration via an end to deflation and (in principal) a limitless supply of cash for stimulus measures. He also promised to take a strong stance against China with respect to the disputed islands. Abe has stated that he would respond with force if China was to land any people on the islands. His remarks come in the aftermath of a visit to the Yasukuni shrine to Japanese war dead (including war criminals) by some 168 parliamentarians. Such visits are always regarded as controversial by Japan’s neighbours.
Currently, China has eight ships in the vicinity of the islands whilst there are ten Japanese fishing vessels manned by activists in the region. Japan is not a nuclear power, but is under the US nuclear umbrella; China is a nuclear power in its own right. Tension over the sovereignty of the islands has already led to a reduction in trade between the two powers.
The disputed islands are known as the Senkaku by Japan and the Diaoyu. They are strategically important and have significant fish stocks nearby; it is also speculated that there could be oil and gas reserves in waters near the islands.