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Cover Stories Series 2013> Monitoring East China Sea Airspace> Archive
UPDATED: September 14, 2012 NO.38 SEPTEMBER 20, 2012
National Dignity and Territorial Integrity
The Japanese Government's misguided decision to "purchase" the Diaoyu Islands may backfire
By Ding Ying

Future options

Japan's aggressive acts provoked protests in China, as demonstrations have broken out in many cities. Japan is reminding the Chinese people of their national humiliation during World War II, in which millions of civilians and soldiers died in the Japanese invasion from 1937 to 1945. The military has even released a message alluding to the risk of war against Japan over the Diaoyu Islands.

Compared with Japan's recklessness, the Chinese Government has stayed calm and restrained. While Chinese observers recommend sticking to the principle of a peaceful resolution, they warn that if Japan takes further provocative acts, the bilateral relationship could spin out of control. Once China takes economic countermeasures, Japan will be hit with the consequences of its actions, they pointed out.

There will be three possible outcomes of the Diaoyu Islands issue, said Qu. First, the two sides could resume the status quo of putting disputes aside. The precondition is that the Japanese Government strictly prohibits anyone boarding the islands or building any facility on the islands, while China submits its territorial baseline of the Diaoyu Islands to the UN. Second, civilian conflicts between Japan and the Chinese mainland, Hong Kong, Macao and Taiwan could escalate, hurting the bilateral relationship but without government involvement. Third, Japan could build facilities or station troops on the islands after "nationalizing" the islands, which will send the bilateral relationship spiraling out of control. "Analyzing the current situation, I think the second one will be most probable," Qu concluded, adding that he still worries about ongoing escalation.

Gao Hong, a senior research fellow with the Chinese Academy of Social Sciences, pointed out that a diplomatic fight will come first. He noted that neither China nor Japan currently wants to start a military conflict, suggesting that China assert sovereignty over the Diaoyu Islands and put pressure on Japan.

However, if Japan continues to upgrade the conflict, the political and diplomatic confrontation will spread to the economic realm, triggering a serious reversal of its economic relationship with China. "The interdependence between the two sides is obvious," he said, adding that economic sanctions will be very possible by that time.

China and Japan are the second and third biggest economies in the world, respectively, and there is close economic interaction and cooperation between the two. Economic and trade confrontation will hurt them both, but Japan's endurance will be weaker because of its reliance on the Chinese economy, said Jin Baisong, a researcher with the Chinese Academy of International Trade and Economic Cooperation.

Jin explained that Japan's debt will be 195 percent of its GDP by the end of 2012, which is the highest among developed countries. Given Japan's struggling economy, its sovereign debt is crossing the crisis warning threshold. "Any external or domestic event could trigger a huge economic crisis in Japan," said Jin. "If China starts economic sanctions, Japan's tax revenue will certainly decrease. A crisis will then follow, once national debt owners dump national bonds in a panic."

Japan's economic reliance on China is much higher than China's reliance on Japan, Jin pointed out. Although China will also see a huge loss from economic sanctions against Japan, it can always import from other countries because of the current global economic downturn.

"Japan must realize that economic prosperity comes from friendly coexistence with its neighbors. Only peace can drive its economic development," Jin stressed. "China's economic sanctions will show Japan the enormous price it must pay for its aggressive ambition on the Diaoyu Islands issue."

China's Countermeasures

- A number of Chinese government bodies lodged stern protests, including the National People's Congress, the National Committee of the Chinese People's Political Consultative Conference, the Ministry of Foreign Affairs and the Ministry of National Defense

- Chinese marine surveillance ships were dispatched to waters near the Diaoyu Islands

- The Chinese Government announced the base points and baselines of the territorial waters of the Diaoyu Islands

- The China Meteorological Administration started to issue forecasts on temperatures, humidity, wind speed and rainfall for the Diaoyu Islands

- The State Oceanic Administration of China introduced maritime environment forecasting for the sea around the Diaoyu Islands

Email us at: dingying@bjreview.com


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