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Dossier: Domestic drivers of the Senkaku/Diaoyu Islands confrontation

by Scott Hickie and Kirthi Jayakumar

Domestic drivers of the Senkaku/Diaoyu Islands confrontation

Speculation on the recurring Senkaku/Diaoyu confrontation has ranged from predictions of military conflict to suggestions of orchestration. However, the domestic drivers of and constraints on the various parties do not lock in armed conflict but, instead, support considerable diplomatic flexibility.

Storified by Open Briefing · Wed, Oct 24 2012 08:51:14

Introduction

Eight uninhabited islands and rocks within an area of about seven square kilometres in the East China Sea are the subject of a long-standing territorial dispute between Japan, China and Taiwan. Called the Senkaku Islands in Japan, the Diaoyu Islands in China and Tiaoyutai Islands in Taiwan, the islands are situated southwest of Japan’s southernmost tip, Okinawa, east of the Chinese mainland, and northeast of Taiwan.

The islands are strategically important in terms of maritime navigation and shipping; natural resources, including fisheries and hydrocarbons; and military defence purposes.

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On 7 September 2010, a Japanese Coast Guard vessel and Chinese fishing trawler collided in the disputed waters off Senkaku/Diaoyu Islands. After thecollision, Japanese sailors boarded the Chinese boat and arrested the captain. This event has came to embody and reflect an emerging narrative of an East Asian powershift: that of a rising China and declining Japan (with the United States waiting nervously on the sidelines).
Understanding the China-Japan Island Conflict | StratforSep 25, 2012 … By Rodger Baker Vice President of East Asia Analysis. Sept. 29 will mark 40 years of normalized diplomatic relations b…
Japan and China's latest spat over the Senkakus | East Asia ForumSep 23, 2012 … Author: Sourabh Gupta, Samuels International September 2012 was supposed to be the landmark 40th anniversary of the no…
Pundit’s predictions of a military confrontation over the Senkaku/Diaoyu Islands have so far proved sensationalist. For the most part, the New Great Game and iteration of historical Sino grievances will have a much longer shelf life.

Domestic drivers and constraints play an important part in the recent flare up of the Senkaku/Diaoyu dispute and the various parties diplomatic and foreign policy positioning. Japan, China, Taiwan and the United States all have some measure of diplomatic flexibility to proactively shape regional peace and security and avoid miscalculation, at least for the short term.

For China and Japan: The Perfect Distraction? – FlashpointsSep 17, 2012 … China has some big problems, and some not-so-big problems. Among the big problems, we might list a disturbing decline …
On 11 September 2012, Japan formerly nationalised the three islands (Uotsuri, Kitakojima and Minamikojima) that were owned by businessman Kunioki Kurihara. While the 2.05 billion yen ($25.9 million) purchase significantly escalated the standoff, the intensity of Sino-Japanese-Taiwanese exchanges had been building up for months.
Taiwan boat returns after standoff with … – – CNA ENGLISH NEWSJun 29, 2011 … The Tafa 268 left Gengfang Fishing Harbor in northeastern Taiwan's Yilan County Tuesday night and navigated to wat…
Japan protests Chinese ships entry into waters near … – ReutersJul 11, 2012 … PHNOM PENH (Reuters) – Japanese and Chinese foreign ministers … Weak U.S. labor market looms ahead of elections … …
Japan Recalls Ambassador in Island Dispute With China – NYTimes …Jul 15, 2012 … Japan temporarily recalled its ambassador to China on Sunday in response … group, at a time when it faces discord ov…
Why Japan, South Korea, and China Are So Riled Up Over a Few …Aug 16, 2012 … The old nationalist tensions are rising over some disputed Asian islands.

Summary of claims to the Senkaku/Diaoyu Islands

Senkaku/Diaoyu: Islands of Conflict | History TodayThe historical roots of the dispute between China and Japan over control of the Senkaku/Diaoyu Islands reveal a great deal about the tw…
Japan’s claim to the Senkaku Islands

Japan’s core contention is that it surveyed the islandsfor 10 years and determined that they were uninhabited (terra nullius). Subsequently, Japanese administratorserected a sovereignty marker on 14 January 1895 and asserted formal sovereign control. The Senkaku Islands were then incorporated into the Ryukyu Islands (NanseiShoto Islands). After World War II, Japan renounced its claims to a number ofterritories and islands in the Treaty of San Francisco of 1951. Under this treaty, the Nansei Shoto Islands cameunder US administrative trusteeship. They werethen returned to Japan in 1971 under the Okinawa Reversion Agreement. Japanrebuts Chinese and Taiwanese claims over the islands by arguing that neithercountry raised objections to the Treaty of San Francisco and only pressedclaims over the territory after the 1970s when it was discovered that theregion had significant hydrocarbon reserves.
China’s claim to the Diaoyu Islands

China asserts that the Diaoyu Islands have been an integralpart of its territory since ancient times, having been important fishing grounds that were administered by the province of Taiwan. The Chinesecontention is buttressed by Ministry of Foreign Affairs claims of historical occupation and legal ownership. China claims discovery of the islands in the Ming Dynasty(1368-1644). The islands were China’s frontier offshore defence against wokou(Japanese pirates) during the Ming and Qing dynasties (1368-1911). China claimsthat Taiwan was ceded to Japan in the 1895 Treaty of Shimonoseki, following the First Sino-Japanese war (1894-95). An 1885 letter from the Japanese Minister of Foreign Affairs,warning against annexing the islands due to anxiety about China’s response, is held up by China as demonstrating that Japan knew the islands were not terra nullius. The Chinese Communist Party (CCP) contends that whenTaiwan was returned in the Treaty of San Francisco, the DiaoyuIslands,which were a part of Taiwan,should also have been returnedto China.

Taiwan’s claim to the Tiaoyutai Islands

Taiwan’s core contention is that the islands are part of its territory and have been inherently part of Taiwan since its inception. Taiwan claims this is supported by the discovery and early recording in maps and travelogues. Furthermore, they claim that the waters around the contested islands have been fishing grounds for Taiwan’s fishermen for more than 100 years. However, both the Chinese and Taiwanese governments claim that during negotiations with China over the Ryukyu Islands, after the First Sino-Japanese War, the islands were not mentioned at all in a partition plan suggested by the then US President Grant.

Domestic drivers and constraints

I. Japan

Summary: There are important national interests that drive Japanese concerns over the Senkaku/Diaoyu Islands. These include freedom of maritime navigation and the security of sea lanes. The Senkaku/Diaoyu Islands are also embedded in the national discourse about Japan’s constitutional pacifism and security capability, an issue Japanese political parties are now poised to start seriously talking about.  

  
(a) Energy security: Japan’s LNG demand


In the aftermath of the March 2011 earthquake, tsunami and Fukushima Daiichi disaster, Japan faces a new energy security landscape. The average utilisation rate of nuclear power plants fell from 68% in 2010 to 38% in 2011.The Fukushima disaster has radically changed public opinion on nuclear energy with short-term demand for liquefied natural gas (LNG) very strong. Some analysts suggest that the shift in Japan’s energy demand profile has put increasing pressure on the government to assert territorial control and sovereignty over areas in the East China Sea containing hydrocarbon reserves.

Oil and gas for Asia: Geopolitical implications of … – Open BriefingSep 15, 2012 … Oil and gas for Asia: Geopolitical implications of Asia's rising demand. Source: National Bureau of Asian Research…
Janet Tavakoli: China and Japan (and U.S.) Island Dispute: It's All …Sep 25, 2012 … The dispute over the territory known as the Senkaku Islands in Japan (and the … China and Japan (and U.S.) Island Di…
The real LNG demandsqueeze for Japan will be over the next five to six years. Once new production fromPacific nation sources comes online in 2017-18, the demand pressure for LNG in Japan mayease. Exploiting the hydrocarbon resources of the East China Sea could notaddress the immediate energy security and demand challenges that Japan facesin the meantime. Even after this period of tight LNG supply, bolsteredsupplies will be sourced primarily from existing allies, including the UnitedStates and Australia, thereby potentially reducing the risks of supplydisruption. 

This is not to discount the prevalence of energysecurity pressures in the Japanese government calculus. Japan is the world’s largest importer of LNG, second largestimporter of coal and the third largest net importer of oil. Procurement ofhydrocarbon resources and actual delivery of resource – in terms of freepassage through the South and East China Seas – are equally critical to Japan’score interests and economic growth.

The importance here is the distinctionbetween securing new domestic supply sources to reduce import dependence andkeeping sea lines of communication open for Middle Eastern, Australian and Southeast Asian LNG resources to be delivered. Considering that the prospective fields in the East China Sea and their estimated reserves would not be significant in Japan’s energy balance sheet, it is unlikely that this is a dominant driver of conflict. The central concern is more likely freedom of sea lanes for import delivery.     

East China Sea – US Energy Information Administration (EIA)Sep 25, 2012 … The East China Sea is a semi-closed sea bordered by the Yellow Sea to the north, the South China Sea and Taiwan to the…
Japan – US Energy Information Administration (EIA)Japan is the world's largest importer of LNG, second largest importer of coal and the third largest net importer of oil. Japan reli…
Disputed Claims in the East China SeaJul 25, 2011 … He is an SSHRC Post-doctoral Fellow at the Balsillie School of International Affairs in Waterloo and a Visiting Resear…
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(b) Rising nationalism? The Ishihara factor
Tokyo's Hawkish Governor Stirs the Pot – By Mark … – Foreign PolicyAug 14, 2012 … COMMENTS (0) SHARE: Twitter. Reddit. Bookmark and Share More… Ishihara put those words in the mouth of Katsumi, one …
Media commentary has focused on the roleof controversial and outspoken Governor of Toyko Shintaro Ishihara inreigniting the Senkaku/Diaoyu Island dispute. In April 2012, Ishihara established a fund to purchase three of the islands and raised 1.47 billion yen ($18.5 million) from more than 100,000 donations. He claimed he was forced to makethis public proposal because of the failure ofthe Democratic Party of Japan (DPJ) government to adequately assert Japanese sovereignty over the islands.
Tokyo's Governor Stokes The Island Feud With China : NPRSep 26, 2012 … Tokyo's flamboyant and ultraconservative governor, Shintaro Ishihara, said last spring that his city would buy som…
Tokyo Governor Reignites China-Japan Island Disputelinktv
Ishihara’s far-right credentials and a son who isrunning for leadership of the Liberal Democratic Party of Japan (LDP) have ledmany to speculate that his prominent presence in security andsovereignty debates signals a Japanese body politic that is shifting to a nationalistic predisposition. Perceived public support for an Ishiharabrand of nationalism is alleged to be constraining DPJ Prime Minister YoshihikoNoda’s diplomatic  options ahead of lower house elections promisedbefore August 2013.
In a broad sense, Noda’s diplomatic space is complicated by Ishihara and the current LDP candidates. In one narrative, Ishihara has been conceived as having pressured or influenced the Noda government to purchase the islands. However, an alternative interpretation is that Noda purchased the islands in order to prevent Ishihara and his supporters from truly disrupting the status quo by constructing ports and manned buildings. Noda’s preemptive purchase at least ensures central government controls the diplomatic balance over the island.

The Diaoyu/Senkaku Dispute: Analyzing Chinese and Japanese …Oct 4, 2012 … The Diaoyu/Senkaku Dispute: Analyzing Chinese and Japanese Perspectives. Author(s): Tsuyoshi Kawasaki, Yves Tiberghien….
If Noda’s strategy was to block Ishihara’s involvement in Japanese-Sino foreign affairs, the tactic may only bring a temporary reprieve if the forthcoming elections return the LDPto government with a coalition partner such the Japanese Restoration Party (JRP). If the new LDP Party President Shinzo Abe secures government – particularly on a nationalist mandate –  it is likely that a more stridently confrontationist approach to foreign affairs and the Senkaku/Diaoyu dispute will be invoked.
Senkakus a harbinger for Japanese shift on China policy? | East …Senkakus a harbinger for Japanese shift on China policy? October 10th, 2012. Authors: Linus Hagström and Björn Jerdén, UI. The ongoing …
Thispredisposes that Japanese society is exhibiting a resurgence in nationalistsentiment, translating to a LDP mandate for asserting sovereignty at all costs.Certainly, the cultural debate around political visits to Yasukuni Shrine,educational curriculum on Nanjing massacre and historical revisionism on WWIIwould suggest taboos around discussing Japanese imperialism of the 19thand 20th centuries are increasingly being challenged by a broader rangeof the political spectrum, not just strictly ultra-conservative politicians andpundits.
Japan, China, and the Tide of Nationalism – Council on Foreign …Sep 19, 2012 … Tensions between Japan and China over the Senkaku/Diaoyu Islands have escalated to a new, troubling level. On Septembe…

However, as Japan works through numerous economicand political transitions, at a juncture point of its regional and globalpower, the idea that nationalism will dictate a “sovereignty of Senkaku at allcosts” mentality is debatable. Unless assertion of sovereignty overSenkaku/Diaoyu Islands is directly linked to longer-term economic stagnation,energy security or disaster preparedness/resilience – the core domesticpolitical concerns – it does not seem plausible that the confrontation couldescalate on nationalistic sentiment alone.

The uncertainty lies in the rise of both independent voters and independent local governmentpoliticians who exhibit Junichiro Koizumi style political flamboyance, as well as coalition formations (potentially including the JRP) that the LDP may be required to make in order to form government if they outpoll the DPJ.

Japan's Independent Voters, Yesterday and Today | Nippon.comAug 16, 2012 … Japan's independent voters have undergone remarkable growth and now amount to half the electorate. Because of a po…
Abe presses Noda to dissolve Lower House this year – AJW by The …Oct 3, 2012 … Opposition leader Shinzo Abe said his party will hinder the government's efforts to pass legislation needed to fina…
Asia Unbound » Japan Restoration Party: The Policy?Sep 14, 2012 … Osaka mayor Toru Hashimoto, center, head of the Japan Restoration Party, and Osaka governor Ichiro Matsui, left, secre…
Abe eyes lifting ban on collective self-defense – AJW by The Asahi …Sep 27, 2012 … Previous ArticleWoman among 2 death-row inmates executed in Japan · Next … Despite his image as a hawkish politician…
(c) Economic threats in the Asian century

Terms like the “lost decades” do not necessarily convey the psychological impact of disappointing Japanese economic performance over the last two decades and the perception of GDP under-performance as insignia of waning regional power.

Considering that China is Japan’s largest export market (18% of all Japanese exports) there could be some suggestion that anti-Japanese protests might further damage the Japanese economy. However, Sino-Japanese trade is domestically significant for both parties. In 2011, total bilateral trade reached $349 billion, and Japanese investment in China reached $6.3 billion. Japan is China’s third-largest foreign direct investor and fourth-largest importer. Mutually assured economic damage is an important domestic constraint for both Japan and China.   

Markets sagely dismiss China's anti-Tokyo tantrums – BreakingViewsSep 18, 2012 … Investors aren't particularly bothered by China's anti-Tokyo protests. … Judging by the two country's st…
Some economic consequences of a 'hot' conflict over the Senkaku …Sep 18, 2012 … An island of tranquility. With the dispute between China and Japan over the Senkaku/Diaoyu Islands heating up, some ha…
Island Spat with China Shakes Japan's Economy | The Irrawaddy …4 days ago … TOKYO—The craggy island specks in the East China Sea aren't even an economic backwater. They have no factories, no h…
Power Struggle In East Asia – Analysis Eurasia ReviewOct 3, 2012 … By Bhaskar Roy. The China-Japan conflict over the sovereignty of Diaoyu/ Senkaku chain of islands in the East China Sea …
Op-ed: Senkaku Islands dispute could paralyze … – The Seattle TimesSep 27, 2012 … Op-ed: Senkaku Islands dispute could paralyze Asian economy. The long- simmering rivalry between Japan and China, trigg…
(d) Self defence, extended deterrence and Japan-United States relations

New Liberal Democratic Party PresidentShinzo Abe and other LDP candidates have already signaled reform of Japan’s constitutionallimitations on military engagement as a key election platform. The more recent defence white papers outline a dynamic defence force concept thatenvisages flexible deployment of the Self Defence Forces (SDF) in the event of maritime territorialdisputes.

DEFENSE OF JAPAN 2012Defense Activities · About Ministry · Press Resources · Public Affairs · Publications … Defense of Japan (Annual White Paper); DEFENS…
A new trend in Japan's defence white paper | Open BriefingAug 21, 2012 … Open Briefing is the world's first civil society intelligence agency; an accessible platform for insight and analy…
Japan's territorial disputes: will they lead to constitutional …Sep 11, 2012 … Author: Rikki Kersten, ANU In recent weeks, Japan has faced escalating tensions over its territorial disputes with Chi…
Thecontradictions inherent in Article 9 (which renounces war as a sovereign right) and Japan’s SDF (its de facto armed forces) are wellknown and have been the subject of controversial political debate. Pressure fromthe United States for SDF participation in Iraq andAfghanistan gave the LDP sufficient motivation to make overtures to constitutional reform.
FUTURE RELATIONS BETWEEN THE UNITED STATES AND JAPANJapan's post-WWII pacifist Constitution (sometimes called the. “Peace Constitution”), which … however, the United States has dram…

The impetus of “occupy and defend now;negotiate and arbitrate latter” in relation to contested territory (as opposed to offensively confrontinghypothetical Chinese or Taiwanese occupation of Senkaku/Diaoyu Islands) doeshave some limited roots in Japan’s constitutional pacifist restrictions. There is an emerging pattern in both the East and South China Seas of contested territory occupiers refusing international adjudication. The desire of Japan for ICJ adjudication over Dokdo/Takeshima Islands but not Senkaku/Diaoyu Islands highlights this point. The same can be said of China’s referral of the Diaoyu Islands to UNCLOS but resistance to such moves in relation to the Paracel Islands.

Why Won't Korea Accept Japan's Invitation to Go to the … – Opinio JurisAug 20, 2012 … Why Won't Korea Accept Japan's Invitation to Go to the ICJ? by Julian Ku. I've been trapped in an August b…
Japan to crank up PR over Senkakus dispute with China | The …1 day ago … TOKYO/NEW YORK — In a major shift in public relations policy, Foreign Minister Koichiro Genba said Wednesday that Japan h…
(e) Military capability: A necessary component of Air-Sea Battle?
Much is made of the strategic benefits associated with the Senkaku/Diaoyu Islands, whether as part of China’s anti-access, area denial strategy or a US-Japan Air-Sea Battle concept. But the military usefulness of the islands is debatable given their high resource support needs and the dependence any island facilities would have on their mainland owners. 
Rock Fight – By James Holmes | Foreign PolicySep 28, 2012 … Rock Fight. Japan could win a war for the Senkaku islands, but it wouldn't be easy. And certainly not without U.S….
Islands Dispute Tests Resolve of China and Japan – NYTimes.comSep 22, 2012 … Nationalists in China and Japan have seized on a territorial dispute and … Search All NYTimes.com … of the islands…
Tensions over US forces in Okinawa and political interventions in base relocation demonstrate that US-Japan security cooperation is not straight forward. There are over 85 US military facilities and 38,000 military personnel hosted in Japan (with approximately 25% in Okinawa) and are the source of considerable social tension. The controversy surrounding the proposed relocation of MCAS Futenma outside of Okinawa Prefecture contributed to the downfall of DPJ leader Yukio Hatoyama. Agreement over force posture in this area of the East China Sea is becoming increasingly challenging with populated Japanese bases that once functioned as a deterrent turning into a potential liability for the US military in the face of a  modernising Chinese military. There is an obvious questioning of the value of such bases remaining within range of Chinese ballistic missiles.
The Okinawa Factor in the Japan-US Alliance — The Tokyo …Jul 13, 2012 … The Security Treaty between Japan and the United States was signed in September 1951, written to come into effect simu…
NTS Alert September 2012This NTS Alert argues that the case of Okinawa illustrates the importance of moving … NTS Alert, September, Singapore: RSIS Centre fo…

II. China

Summary: The Chinese Communist Party’s current response is framed by factional posturing ahead of the CCP’s 18th Party Congress and once in a decade political transition. However, “switching off” anti-Japanese sentiment and re-normalising economic and trade flows might be more difficult than anticipated, with potential spillover effects on other territorial disputes.

(a) Sino nationalism, anti-Japanese sentiment and multiple territorial disputes

The Japanese purchase and nationalisation of three of the islands has triggeredboth authentic and orchestrated anti-Japanese protests in China. The protests led to damage to Japanese business properties, consulates and other interests in anumber of provinces. Protesters have articulated strong anti-Japanese rhetoriccombined with more general Sino-nationalist sentiment.

 

Victimisation at the hands of imperial Japan throughout the 19th and 20th century frames Sino grievances and attempts to justify some form of push back. The root of nationalist sentiment is not an artifact of historical maps stretching back to the 13th century, but two Sino-Japanese wars that are very much part of Chinese modern history.

East Asian rivalry: Protesting too much | The EconomistSep 22, 2012 … Anti-Japan protesters shout slogans as they march outside the Japanese embassy in Beijing Source: AP Protesters laugh …
A Deadly Brew: Resources, Nationalism, and History – China PowerAug 17, 2012 … This appears to be the silly season in East Asia. Various uninhabitable or barely inhabitable islands are again the ob…
China's Self-Absorbed Nationalism – The DiplomatAug 31, 2012 … The mid-August popular demonstrations in Chinese cities and … only part of the self-absorbed nationalism fostered by…
It is important to make a clear distinction between Chinese approaches to territorial disputes in the South China Sea and in the East China Sea. There is a danger in characterising protests against contesting nations (including the Philippines, Vietnam orJapan) as a unified expression of rising Sino nationalismconcomitant with economic and military growth. Collective culturalnotions of China’s “peaceful rise” (hepingjuiqi) would be challenged by the CCP opening multiple fronts of territorial contest spanning the Pacific Ocean.Stirring up nationalist discontent will have unique consequences in differentcases.
(b) China’s Anti-access/Area Denial strategy

Whilethe Diaoyu/Senkaku Islands may have limited offensive capacity for a US-JapanAir-Sea Battle concept, their potential value as a defensivecomponent of China’s Anti-access/Area Denial (A2AD) strategy should not be so easilydiscounted. 

 

In 2010 testimony to the House of Representatives US-China Economic & Security Review Commission on China’s active defense strategy and its regional impact, Captain Stacy Pedrozo argued that China’s current military strategy accords with a 1982 navalmaritime plan outlined by then-Vice Chairman of the Military Commission LiuHuaqing:

“In the first stage, from2000 to 2010, China was to establish control of waters within the first islandchain that links Okinawa Prefecture, Taiwan and the Philippines. In the secondstage, from 2010 to 2020, China would seek to establish control of waterswithin the second island chain that links the Ogasawara island chain, Guam andIndonesia. The final stage, from 2020 until 2040, China would put an end toU.S. military dominance in the Pacific and Indian Oceans, using aircraftcarriers as a key component of their military force.”

China's Active Defense Strategy and its Regional Impact – Council …Jan 27, 2011 … Captain Stacy A. Pedrozo testifies before the House of Representatives U.S.- China Economic & Security Review Commi…
1 China's Challenge to East Asia's Maritime Order James Manicom …This paper assesses the impact of China's rise on maritime order in East Asia. ….. October 2007, www.navy.mil/maritime/Maritimest…
The United States is clearly concerned about any assertive behaviour from China with respect to territorial claims in the South and East China Seas, as it also represents a potential military threat and an effort to alter the strategic equilibrium.
US Force Posture Strategy in the Asia Pacific Region: An IndependentAug 15, 2012 … The study reviews current and emerging U.S. national security … http://csis.org/ files/publication/120814_FINAL_PACOM…
However, such fears may not give sufficient weight to the fact the near seas will be important to China’s A2AD envelope but it is questionable whether small outlying islands are crucial to this strategy.
White Paper on China's National Defense in 2010 – China.org.cnMar 31, 2011 … X. Arms Control and Disarmament · Back to China.org.cn. Information Office of the State Council of the People's Re…
(c) The limits of economic retaliation

Contrary to the idea that bilateraleconomic interdependence leaves China and Japan equally exposed to economicretaliation and sanctions, some commentators argue that China holds the Japanesepurse strings and is in a superior position vis-à-vis trade and investmentexposure. The export restrictions placed on rare earth minerals after the 2010dispute showed the CCP was not afraid to apply trade sanctions. In fact, Jin Baisong from the Chinese Academy ofInternational Trade has suggested China should use its power as Japan’s biggestcreditor, with $230 billion of bonds, to “impose sanctions on Japan in the most effective manner” and bring Tokyo’s festering fiscal crisis to a head.

The China Money Report » COLD WAR 2Sep 23, 2012 … In the cover story of the latest issue of China Economic Weekly, a magazine affiliated with the People's Daily, Me…
The problem with such suggestions is that the economicreality of selling Japanese bonds could be very costly form of protest. Theacquisition of Japanese bonds by the Chinese government is a long-term economicstrategy, with Japanese yen sought for its relative currency stability. Politicised disposal of an investment safe haven may bring substantial economic costs for China. China is probably too constrained by both domestic economic structural issues and the global slowdown to implement any radical retaliatory economic sanctions. 
Japanese firms in China attacked by mob, stop operations – Asian AgeSep 17, 2012 … The anti-Japan demonstrations in China over disputed islands on Monday took an ugly turn with protesters attacking som…
China has 'too much lose' to impose Japan sanctions | The Asian AgeSep 23, 2012 … While Chinese state media has warned Japan that it will suffer economically for nationalising disputed islands, analys…
What's really surprising about the China-Japan standoffSep 25, 2012 … Look beyond the headlines and the hysteria and there are some important questions to be asked about the diplomatic sta…
The Diaoyu/Senkaku Dispute: Analyzing the Chinese PerspectiveThe Diaoyu/Senkaku Dispute: Analyzing the Chinese Perspective. CANADA- ASIA AGENDA. October 4, 2012. Yves Tiberghien1. Relations between…

III. Taiwan

Summary: In a bid to demonstrate to a domestic audience political leverage and support for historical Taiwanese fishing in the disputed waters,  the administration of President Ma Ying-jeou has taken a strident approach to negotiating fishing rights around the Tiaoyutai. Within their strategic calculus is an awareness that Japan may be willing to make concessions on fishing rights to avoid Sino-Taiwan collaboration on contesting Japanese claims.   
(a) The desire for resource development

 

Though often overlooked by Western media, Taiwan also lays claim to thedisputed island chain and has been involved in many on-seaskirmishes with the People’s Republic of China and Japan. Many Taiwanese believe the islands belong to Taiwan and this belief is sharedby both pro-China elements in President Ma Ying-jeou’s Kuomintang (KMT) and members of thepro-independence Democratic Progressive Party, who like to annoy China byasserting Taiwan’s sovereignty over the islands.

Taiwan wades in: Water-gunfighting | The EconomistSep 26, 2012 … A SMALL fish like Taiwan, diplomatically isolated as it is, does not often pick … use of cookies. Review our cookies…
Presently, President Ma is suffering from dismal popularity ratings, as low as 15% in one cable news channel poll. Commentators have suggested tough talking over theislands could boost his standing. Instead, Ma appears to have responded to public pressure by favouring a low key andrational approach. In early August 2012, he announced his East ChinaSea Peace Initiative, calling upon the three contending claimants to put aside their disputes, start a dialogue and develop the area’sresources in harmony.
Can Taiwan Bring Peace to the South and East China Seas …Sep 25, 2012 … The Diplomat Blogs … Back to Flashpoints … More recently, Taiwan escalated its presence in the East China Sea this…
Taiwan relies on imports for over 98% of its energy.  While proven hydrocarbon reserves would not significantly reduce Japan’s energy imports, for Taiwan – whose energy use baseline is much smaller than Japan’s – the area’s reserves would represent a sizable proportion of total oil and LNG use. 
(b) Fishing disputes with Japan unlikely to encourage Sino-Taiwan cooperation
There are also rich reserves of fish in the disputed waters that Taiwan seeks access to. The recent transition from a passive stance to on-sea skirmishes was quick and related to Taiwan’s hopes to force Japan’s hand ahead of negotiations over fishing rights. Ma has publicly voiced his praise for the Taiwanese fishermen that have protested in the waters off the disputed islands.

The 17th round of bilateral Taiwan-Japan talks on Taiwanese fishing rights in the disputed waters are set to resume in November 2012 according to recent reports. Suggestion has been made that elements of the Japanese bureaucracy are eager to discourage Sino-Taiwan collaboration on the disputed waters by engaging Taiwan on fishing rights. However, the Taiwanese Ministry of Foreign Affairs has indicated that Taiwan will not be cooperating with China to resolve the sovereignty disputes, even in the face of some polls which show over 50% of respondents support cross Taiwan Strait cooperation on this issue.

Taiwan's unresolved fishing rights add to Senkaku headache – AJW …Sep 26, 2012 … Previous ArticleJapan auto makers to slow output in China amid … of the Foreign Ministry's Asian and Oceanian Af…
How not to solve an international border row — a water fight in the …Sep 25, 2012 … Japanese Coast Guard vessels fired water cannon to turn away about 40 Taiwan … How not to solve an international bor…

Factoring in the “new” US Asian pivot

The United States has made two important, and contradictory, comments on the dispute. Defense Secretary Leon Panetta has told Xi Jinping, China’s likely next president, that the United States “takes no sides” on territorial disputes in Asia, including that over the Senkaku/Diaoyu Islands. However, Assistant Secretary of State for Asian Affairs Kurt Campbell indicated to the Senate Foreign Relations Committee that the Senkakus come under Article 5 of the US-Japan Treaty of Mutual Cooperation and Security, meaning the United States would be obliged to defend the islands from any full-scale military attack. By claiming that the mutual security treaty includes the Senkakus, Washington seems to be implicitly regarding the islands as Japanese territory. This raises the question of whether the United States would be “forced” by treaty obligations to militarily intervene in a dispute it proclaims neutrality in.
Is the U.S. Committed to Defend the Senkakus? Text of Article 5 of …9/23/2012 @ 6:45AM |8,368 views. Is the U.S. Committed to Defend the Senkakus? Text of Article 5 of the U.S.-Japan Treaty. 14 comments,…
Chinese-Japanese Senkaku Island Dispute – Vital U.S. Strategic …Sep 26, 2012 … the US has decided to back Japan's claims to the Senkaku Islands. … Geopolitics · Africa · Asia … Senkaku Isla…
Commentary: Island Wars | The National InterestOct 1, 2012 … An Anti-Japan demonstration in China.The long-standing dispute between Japan and China over a chain of uninhabited isla…
This apparent contradiction and ambiguity may be evidence that the US administration is aware of the lose-lose situation it could face if the dispute is not defused, hence the US focus on calming tensions. A similar type of hedging of the US relationship with China was apparent in the October 2012 presidential candidates debate on foreign policy when Barack Obama called China “both an adversary but also a potential partner.” Even a more hawkish US administration may be forced into hedging on the US-China relationship until there is a clearer picture of the US alliance network in the Asia-Pacific and Indian Ocean, the United State’s future energy security, and the realignment of the Asia-Pacific’s trade architecture, which is subject to ongoing multilateral negotiations (the Comprehensive Economic Partnership in East Asia and Trans-Pacific Partnership).
Panetta to urge China and Japan to tone down dispute over islandsSep 16, 2012 … Haraz N. Ghanbari/AP – “I am concerned that when these countries engage in provocations of one kind or another over th…

This US posture should not be interpreted as reducing the significance of US interests in freedom of maritime navigation. The United States has important export markets in Malaysia (which receives 1.8% of all US exports), Singapore (1.3%), Thailand (1.2%) and India (1.1%) but they are not as significant as exports to China (10.5%) and Japan (9.7%). US interests in freedom of sea lanes will inevitably be guided by key exporting interests and substantial US exports to China may temper its position on maritime territorial disputes.

Escalation in the confrontation, real or orchestrated, might prevent the Unite States from simply hedging its bets and potential force Washington to show its hand. Reneging on key regional security obligations in the South or East China Seas would undermine US balance of power strategies, a core component of their Asian pivot. However, these obligations and international relations strategies are constrained by tight fiscal conditions and domestic public opinion.
 

Military budget austerity, a conflict-fatiguedpopulation and a large question mark over the efficacy of US militaryinterventions over the last decade are important constraints on the observanceof defence treaty obligations the United States owes to a number of countries making up the “new”Asian pivot.
 

To date, the US Secretary of Defense hasreiterated America’s intention to fulfill its treaty defence obligations to both the Philippines and Japan. The USadministration would be aware that anything short of absolute commitment onmutual defence obligations would have adverse consequences for existing USalliances in the Asia-Pacific and render the courting of new partners such as Vietnam and, potentially, Myanmar impotent. However, the likelihood of automatic US military involvement in any escalated conflict over the Senkaku/Diaoyu Islands is seriously reduced by the ongoing need to hedge their bets with China and the other limiting factors discussed above; something US allies in the region are only too well aware of.

An Ominous Pledge – China Power – The DiplomatSep 26, 2012 … The recent tensions between China and Japan over the Senkaku/Diaoyu Islands have garnered much attention. While some a…

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