China and Japan face off: Tiny islands, big dispute (+video)

The Great Hall of the People, the heart of Beijing's ceremonial political life, should have been ringing last month with toasts and speeches to fete the 40th anniversary of diplomatic relations between China and Japan.

But the banquet rooms sat silent, the celebrations canceled.

The two neighbors' ancient enmity had ensnared them again, this time in a territorial dispute over a handful of remote islands.

Hotheads on both sides of the East China Sea were calling for war. Even the coolest heads could not rule that prospect out.

"Relations are worse than they have ever been in 40 years," says Liu Jiangyong, a professor of Japanese politics at Tsinghua University in Beijing. "I don't see much chance of a war; but I think Japan is preparing for one, and we should, too."

The possibility of armed conflict between the world's second- and third-largest economies is enough to scare governments around the globe. It is especially alarming to the United States, whose alliance with Japan would draw it into any fighting.

Beijing and Tokyo both claim sovereignty over five islands in the East China Sea, known as the Diaoyu in China and as the Senkaku in Japan, which administers them.

Four decades ago China agreed not to press its territorial claim on the tacit understanding that Japan would not settle or build on the rocky islets. Every now and again nationalist activists from Hong Kong or Japan would land on one of the islands and plant a Chinese or Japanese flag; there was an angry showdown two years ago when Japan arrested a Chinese fishing boat captain. But the status quo prevailed.

Everything changed on Sept. 11 this year, when the Japanese government purchased three of the islands from their private owner. Chinese leaders and media reacted with fury, spurring demonstrations in scores of cities, some of which turned violent, with people looting and torching Japanese-owned businesses.

In vain did Japanese officials try to explain that Prime Minister Yoshihiko Noda had "nationalized" the islands to keep them out of the hands of the governor of Tokyo, a nationalist firebrand who was trying to buy them, likely to use them to provoke China.

Beijing declared its "base lines" around the islands, defining the exact area of its territorial claim, as the legal basis on which it claimed jurisdiction, and began sending surveillance vessels and, in one instance, two naval frigates, within 12 miles of the islands, into what Japan claims as its territorial waters.

"These patrols change the fact of only Japan controlling the islands," says Professor Liu. "Japanese administration and management will no longer be a reality."

At the same time, the Chinese Navy and Air Force staged joint drills in the East China Sea, not far from the disputed area, and the vice chairman of China's Central Military Commission, Gen. Xu Caihou, publicly urged the Army to "be prepared for any possible military combat," the state news agency Xinhua reported.

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