China Versus Japan: Shooting War, Economic War or War of Words?

George Washington's picture

article 2198707 14D9B665000005DC 942 634x375 China Versus Japan: Shooting War, Economic War or War of Words?

Senkaku islands via AFP China Versus Japan: Shooting War, Economic War or War of Words?


Are China and Japan Going to War?

The conflict between China and Japan over a small chain of disputed islands – called “Senkaku” by Japan and “Diaoyu” by China  – is fluid.

Here are some of the key recent events in this dispute:

  • Chinese hackers have launched a cyber-attack against Japan, taking down at least 19 Japanese websites – including those of a government ministry, courts and a hospital  – and adding messages proclaiming Chinese sovereignty over the islands
  • The protesters chanted slogans such as (1) “down with the U.S. imperialists”; (2) “The U.S. government is the mastermind”, an apparent reference to the dispute over the island and the United States’ security treaty with Japan; and (3) “return the money!”, probably referring to the Chinese government’s purchase of U.S. government debt

What’s Going On?

The islands are small and uninhabited … so what’s really going on?

True, they are in important sea lanes. And the seabed nearby is thought to contain valuable mineral resources.  But there are much bigger issues at play.

As Tyler Durden notes, Chinese anger over World War II is part of the equation:

All day long we read how today, on the 81st anniversary of Japan’s invasion of Manchuria, anti-Japan protests flared up in 125 Chinese cities, for the most part peaceful, protesting what China believes is an illegal Japanese attempt at annexation of the Senkaku Islands as a proximal catalyst, but likely also an outlet for years of pent up anti-Japanese sentiment (of which there is plenty on both sides).

Some say that the incident is really about China testing (1) Japan’s weaknesses and (2) America’s alliance with Japan:

Steven Clemons, editor-at-large of The Atlantic, says the two nations are probing the other’s weaknesses.


“It is really about China testing the United States and its alliance with Japan,” he told RT, adding that he expects the skirmishes to continue for a long time.


“What we are seeing today is a snapshot of what we are going to see for the next decade – or more.”

Indeed, while U.S. SecDef Panetta says that American military focus in Asia are not aimed at containing China, Panetta and other American leaders have previously hinted that any credible economic challenge to the U.S.(from China or elsewhere) will be considered an act of war.

Anyone who has 2 brain cells to rub together knows that the “long-game” of U.S. military shenanigans is to contain and weaken China.  The U.S. wants to topple Syria’s Assad because he is a close ally with Iran, and the U.S. wants to topple Iran because it is a close ally with China.

But what does that have to do with Japan?

I spoke with a very smart friend who grew up in China, has lived in the United States for a number of years, and has a very sophisticated view of geopolitics.  (He is a professional and an entrepreneur, and isn’t directly affiliated with the Chinese government).

He told me that the Chinese and Japanese have periodically argued over these islands, and reminded me that the Chinese people are still furious at Japanese imperial invasion and brutality during WWII, especially Nanking  and Manchuria.

Most interestingly, he said that the Chinese and Japanese both have upcoming elections, and that they are simply posturing to look tough for domestic consumption.

He said that the Chinese and Japanese leadership both know where the “line” is, and that neither will cross the line and actually start a war.

Willy Lam, Adjunct Professor, China Studies, Chinese University Of Hong Kong agrees:

From the Beijing’s perspective there will be a major change of leadership coming up at the 18th Party Congress. At this stage the government also doesn’t want to appear as weak. Particularly given the rise of Chinese nationalism.

Likewise, Linus Hagström – associate professor of political science and a senior research fellow at the Swedish Institute of International Affairs – says that Japan’s actions are largely driven by political considerations of “not appearing weak”.

Currently, China is Japan’s largest trade partner, while Japan is only China’s fourth-largest trade partner.  However, the United States is obviously a huge trade partner for China, even if America does end up backing Japan in conflict over the islands.

So the one certainty is that there are competing factors and motives involved in the dispute.


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Septicus Maximus's picture

a real barnburner of analysis that was, Georgie...  


Divine Wind's picture



Three Mile Island Nuclear Power Plant near Harrisburg / Middletown experienced an emergency shutdown and big steam blow this afternoon.

Did you know?

Will you glow?

You need AlertsUSA. Bad.


Sorry. Could not resist.

pashley1411's picture

They've been reading too much Krugman, and think that a spike in demand for SAM's would help both economies.   

JuicedGamma's picture

I just went over to ny times to see what he's written about now, Krugman has my attention for being one of most irritating opinion writers ever.  He's so politically compromised it's impossible to take anything he says seriously.  The really unfortunate and scary thing is that he is Bernanke's counterpart in many ways, looks mannerisms, speech patterns and academic backgrounds.

We are at the mercy of Mr Bernanke let us hope Mr Krugman is never more than a political commentator.  He most certainly is NOT an economist.


JeffB's picture

They should have read the part where he said a fictional space alien invasion would be safer.


knukles's picture

Krugman never said anything about fictional aliens, he was talking about fictional economic analyses and consequences pertaining thereto... like everything being hunkie dorrie.
Gotta love Krugman.
He plays an important role in society.
Everybody need somebody to ridicule.

AgShaman's picture

Maybe the Chinese hold a grudge for a very long time and are looking for some payback....remembering Nanking?

RafterManFMJ's picture

Hell yea we used to drink together at Zelda's down on Forbers; what's old Nan up to these days?

straightershooter's picture

1.War of Words--Done.

2.Trade wars-- on going. Expect Japanese cars sale down over 50% for the month of September. No Chinese consumers would buy a japanese-brand car.

3.Shooting wars-- Coming soon if.........  with a devastating blow to the US of A..... Japan would find out at its horror that it was a Con deployed by US of A.....

US of A claims mutual defense treaty between Japan and US of A would only become effective if a Con ( Certificate of Need) is authorized by the CON-gress.


Japan, take notice how the US of A Conned the Republic of China (Taiwan) and  the South Vietnam. See, it is the national interest of US of A that  cuns (eh,counts), after all.

Lumberjack's picture

Islands to the south are in dispute, so are northern ones...



Russia to send navy vessels to disputed Pacific islands


So China and Russia both seem to have a stake and take a crack of whom gets drawn in. Interesting game of chess.  

Element's picture

One thing I have learned over the years is to not believe what Reuters reports, and to wait for a confirmation of what Russia actually does.

But it seems the long developing alliance of necessity between China and Russia is developing legs, Russia now has a huge oil and gas customer, and they are going to stay on good terms, for the strategic quid-pro-quo Moscow will require from Beijing, and which is still to come in Europe, and the Middle East over coming years.

It is entirely possible China will take the Islands with as little force used as possible, and arrest anyone in the area.

Lumberjack's picture

You are forgetting Africa. China has considerable interests there as does Russia. However, if you had been following the 'acquisition' of RUSAL over the last year or so, the true culprits rear their ugly heads.


That is just the beginning. Norilsk and other major mining/metals players are now controlled by the same including Century (iceland) if I remember correctly.

lostcause's picture

 The funniest thing about this whole situation is, both sides have already spent more fighting for these islands than their actually worth!

The Navigator's picture

Potential oil rights, international maritime borders, fishing rights, can be worth hundreds of millions, perhaps billions.

Senkaku and Parcel islands - it's all about money, fishing and oil rights and expansion of maritime borders.

Nobody For President's picture

So? What was VietNam worth to the average American taxpayer?




SAT 800's picture

I think if the Japanese try to push their luck they'll find out mutual defense treaties are just written on paper. Hopefully they will have some kind of peaceful resolution.

Ar-Pharazôn's picture

so do you think that if China will use military force against Japan the USA will just look? comon be serious.

The USA will never let Japan fight alone. Japan is like a bridgehead in Asia for the USA. So they will sure back Japan in a conflict. And you can count on that

bankruptcylawyer's picture

funny , all the articles you've written on this subject ignore the series of treaties that exist between JAPAN AND CHINA. read about them. they evolved over time since ww2. they are interesting, and revealing. they read more like mutual trade cooperation/relationship agreements, with an implicit understanding that peace ends when there is no longer a basis for mutual cooperation. 


what i like about 'legal' agreements is that they give the appearance of legitimacy. might doesn't make right, but it makes. law makes right, but it only makes appearances. 

George Washington's picture

Are you a creditor- or debtor- side bankruptcy lawyer? 

The Navigator's picture

Interesting - I've seen this asked several times before, but never a reply.

bankruptcylawyer's picture

used to do consumer debtor bankruptcy. and i've done some corporate creditor work. when i opened my account i was a bankruptcy lawyer but right now not doing that anymore.

AnonymousCitizen's picture

Seems straightforward to me. The islands in question do not belong to either China or Japan.

They belong to Taiwan!

johnnylaw187's picture

From an American with Chinese parents (but I can't speak Chinese lol) and a Chinese gf...FWIW.  

I don't think we (westerners) fully understand what's going on.  We know there's a toxic mix of nationalism, WW2 memories, Chinese history (mostly bad memories and much of it self-inflicted), economic benefits and importantly "face" (both from Japan and China).  So how does a deal get done where everyone saves face and gets what they want?  50/50 mineral rights?  GF says Japan could probably have whatever they wanted if they just formally apologized for 1931-1945 but she's obviously biased.  

My parents certainly feel this one can lead to a military blowup (they're in their 70s). Then again, they think if it takes invading Taiwan to bring it back to China, that's a good idea lol   


JohnKozac's picture

This is actually bringing Taiwan and China closer then ever before. Taiwan has sent several ships to support China's claim. Korea may do the same some officialy said last night. All three of those  nations have very deep memories of WWII and failure of the Japanese properly to apologize. This may shake up allegiences there for a big surprise. Even some Russian offical said last night that Japan needed to end its aggression immediately. He said most Russians support China's claim.


Ar-Pharazôn's picture

Taiwan did what?


They also claim those island! and the hate between Taiwan and China is pretty much the same between Japan and China

SAT 800's picture

You can Russia to the list of nations who were militarily humiliated by the Japanese; in the Russo-Japanese naval battles in 1911; or whatever, (close enough). The Japanese blew the shit out of the Russian Navy; if we really are their friends, (because of our fond memories of Pearl Harbour?), then we're probably the only ones.

Arnold Ziffel's picture

There's a reason why we have a warship named Iwo Jima.


"Iwo Jima was also the only battle by the U.S. Marine Corps in which the overall American casualties (killed and wounded) exceeded those of the Japanese,[6] although Japanese combat deaths were thrice those of the Americans. Of the 22,000 Japanese soldiers on Iwo Jima at the beginning of the battle, only 216 of these were taken prisoner. Some of these were captured because they had been knocked unconscious or otherwise disabled.[1] The rest were killed or missing and presumed dead.[1]"



Uchtdorf's picture

Your version of the outcome of the Russo-Japanese war overlooks the fact that Russia's navy was North Sea/Atlantic Ocean-centric. They had few assets in place off the coast of Siberia. It's flippin' Siberia, for goodness sakes. Who's gonna invade that place? So yes, the Japanese "won" that war, but if Russia had actually bestirred itself and sent the real Russian navy to the Pacific, Japan would have been in deep unchi. (unchi is the kid's word for poopoo in Japanese)

But alas, there was no convenient Panama Canal for the Russians to get into the Pacific so around the South African Cape was the only way. Too much trouble...

Ar-Pharazôn's picture

your knowledge of history is very poor.


they sent their best battleship. alone. no other commentary needed

Carl Spackler's picture

That's right.

The only thing more passionate than seeing China and Japan square off in a no-holds-barred cage match would be seeing Russia and Japan meet in the ring.

bigkahuna's picture

Unless I am mistaken, the Japanese had their nutz clipped at the end of WW2 and it does not seem they have them back yet. If they did, the ass kickings would have commenced decades ago. 

I don't hear of any Japanese fleets heading for these fucking islands yet?

swmnguy's picture

Seems like all involved parties have a lot of motives to engage in posturing.  It suits China's aims to have a crisis with Japan; that's a pressure relief valve for the Chinese populace, which is getting uneasy and restive.  Chinese rulers going back 5 millenia have been very nervous about peasant uprisings, with very good reason, and have devised very sophisticated techniques for sidetracking that energy.

Japan could use an external distraction from their decades-long economic stagnation and the clear existential threat they've uncorked with Fukushima.

And the US is always up for a good sabre-ratlling exercise.  That it involves getting to play the tough defender of Ally Japan, and facing down the Yellow Peril in Red China is just gravy on top.  Hilary Clinton is great at this sort of thing.

All three countries could use something to distract their easily distractable ciitizens.  This is tailor-made.  Our politicians can float our big boats around and talk tough on Fox News, getting more complicity to blow a trillion dollars a year on military waste.  The Japanese can play the victim but reassure their people that they are well-defended by Uncle Sam, but maybe they too should start burning money on weapons.  The Chinese can justify a big naval buildup to eat up some of that increasingly shaky ForEx reserve they're siitting on, like popsicles on a really hot day.  Plus the Chinese can distract their 1.2 billion potential rioters with something that doesn't threaten the top beneficiaries of the kleptocracy.

Nobody will get hurt, unless one boat runs over another boat, or the riots get out of their preapproved bounds.


logicalman's picture

The 'leaders' of the 'free world' are just little kids throwing stones.


williambanzai7's picture

This series of events was not a surprise since the Japanese said they were planning to do it in a Wall Street Journal ad campaign in July.

The Chinese can put a lid on this whenever they want to. Last time this happened they rounded up all the provacateurs seen on video two weeks later. The economic stakes are huge. I have never seen so any Mao posters publicly displayed. I thought he was an anachronism, but he has become a new symbol of fervent Nationalism. Events are being channeled for political advantage.

The Japanese government is using this as a barometer of US commitment to the principle of mutual self defense. (Do they need to think about nuclear readiness?) They undoubtedly have the technical ability to do it if they feel it is necessary. They ave other Islands in dispute with Russia and Korea. There is plenty of graying Nationalism. The economic stakes are huge.

The Americans Know all of the rest of Asia is watching. The economic and strategic stakes are huge.

What is disquieting is how an uncontrolled incident has the potential to spin rapidly out of control in a situation dominated by historic emotion and the Asian concept of "saving face". The situation is highly susceptible to a false flag operation.

It's good that Chinese 1000 vessels were not headed to those Islands.

If the Chinese decide to take those Islands by force, they will and SE Asia will run for American cover. This is antithetical to their global efforts at soft diplomacy.

North Korea could see the distraction as an opportunity for adventure.

I never realized all the clean 7-11s in China are operated by a Japanese franchisee.

ZackAttack's picture

I went back and re-read a book on the Falklands war, thinking about this scenario.

Japan's systems are generally a known quantity. The thing I just don't know is how well China's attack submarines and SSMs will work.

China has a lot of throw weight, and lots of amphibious assault ships. However, that's a lot of sea to cross and China has no history of large-scale marine operations. Shit goes terribly, horribly wrong. This would not really be a good time to learn the ropes. If I'm China, Okinawa has to be taken out of play. Otherwise, they have no chance of gaining air superiority. Their fleet would be in continuous peril. Kadena is a powerful base, and a direct US interest, though. I can't imagine these rocks being worth the cost.   Right now, I'm leaning toward Japan prevailing in the defense. I think they are capable of inflicting fearsome losses on the Chinese in the air and on the sea. History points to China's shiny toys not working nearly as well as advertised.
YHC-FTSE's picture

It is highly susceptible to a false flag op, and the economic stakes are very high. You are spot on about these, but the Japanese are, once again, dingbat crazy if they think they can claim these islands (And others) that were taken during their imperial expansion. The moment Japan lost WWII, they lost all claims to them and eking out a stubborn, niggardly and annoying claim to their imperialist expansion days after all these years is surely beyond the breaking point of the people in the region who endured the invasion and occupation by the Japanese forces. The Chinese, Russians, and Koreans.

As a South Korean friend once told me, "They (The Japanese) can have Dokdo when we have done to them exactly what they did to us", and explained in graphic detail what the Japanese did during their occupation of Korea, which tallies quite closely with what I know about how the Japanese treated our British POWS during the war. I think that reflects the strength of their feelings on the matter, and it would be best for all concerned if those spurious claims to these islands were dropped by the government of Japan once and for all. They were never Japanese in the first place, and keeping them is akin to rewarding military aggression. 

PavewayIII's picture

The Americans Know all of the rest of Asia is watching. The economic and strategic stakes are huge.


Wasn't the USD just neutered a couple of days ago? The stakes were huge - and the U.S. lost.


Didn't the U.S. make sure a 'new' central bank was established by the rebels in Bengazi well before the uprising even won?  Gaddafi was on the verge of replacing the petrodollar and paid with his life. Iran dumped petrodollars - it will only have been a matter of time before the bankers had U.S. soldiers 'defend' the dollar there.

But China and Russia just put the nail in the coffin of the USD - that was about all the banks and Washington had left. It's way too late for a regional or even a global war to save the dollar. The U.S. is impotent - it can't help Japan, Israel or anyone else anymore. I'm not sure how the BIS fits in - do they even care?

hangemhigh's picture


I have never seen so any Mao posters publicly displayed. I thought he was an anachronism, but he has become a new symbol of fervent Nationalism. Events are being channeled for political advantage.

how does the Bo Xilai psychodrama impact this turn of it related...if so how??  

williambanzai7's picture

I am sure there are people who are feeling intimidated and would like to use this to their advantage. But whoever is in charge seems to have responded proactively, i.e., let everyone blow off steam but make sure there is a big show of police force. Bashing Japan is a national pastime in China, and no wonder.

Anusocracy's picture

China should relinquish claims to the islands for a couple hundred million lifelike Japanese dolls for their couple hundred million sexually unfortunate males.

johnjkiii's picture

China sees itself as the "Middle kingdom" and is very unhappy with everyone. The Opium Wars - caused by the Brits - where they had several ports, e.g. Hong Kong, taken from them. The Japanese took other territories including the islands in dispute. China is not so much territorial as it is threatening. They use these tactics all the time to scare adversaries into doing what they want. There is an uninhabited region on the Indian border long in dispute. Mao sent troops there once when he felt the Indians were encroaching. He drove them back 20 miles then retreated himself to his former position. War there is not likely but saber rattling certainly is and all this makes for lots of uncertainty. Read Kondratiev's "The Major Economic Cycles" where he shows the cycles of economies. Most of these end in major wars. 

Peter Pan's picture

"Shooting War, Economic War or War of Words?"

Any one of the above are dangerous when psychopaths  are involved.

bank guy in Brussels's picture

Obviously the Japanese elites started this stupid arrogance over islands near to China, because the US told them to do it ... they wouldn't have dared without US backing

The Japanese elites accept constant humiliation at the hands of Americans (rape of Japanese by US military personnel, bases in Japan which Japanese hate)

Japan's elites rolled over in the 1985 Plaza Accord extortion by America, which directly led to currency imbalance, internal huge bubble, Japan's crash four years later, and the 'lost decades' since then

Now Japan's elites, betraying Japan's people, are rolling over in 2012 in another American game:

- inducing China to become aggressive, leading much of the rest of East Asia to pull closer to America

- sabotaging the Japan - South Korea - China alliance which had been getting nicely started, which would have made the world's largest economic power

- helping the US destabilise the whole region, something America typically seeks

- and maybe inflaming one flank of World War III - tho hope GW is right and the Asians are smart enough not to take the US bait

Vlad Tepid's picture

I don't have any issue with what you say Bank Guy, but reposting the same tired line over many threads sort of wears out the listner's welcome to what you have to say.  Please feel free to share original thoughts and don't keep barfing the same stuff on page after page.

JohnKozac's picture

Panetta is obviously disappointed at proposed Congressional military cuts so it would be no surprise he throws fuel on any fires anywhere in the world, even this one.  This may give him more leverage in requesting greater funding for new/additonal war toys.


He is walking a thin line since he could easily turn the anger/boycotts in America's direction hurting auto sales, etc there. Right now, GM is sitting pretty since the Chinese are switching from Japanese cars to German and GM cars. If Panetta is wise, he can play this to our advantage and creat more jobs and give our economy a boost.


I agree with Brussels above except that not all Asian countries are siding against China in this dispute. BBC and some Chinese blogs (in English) show Taiwan and SK solidly behind China re: these islands despite the fact they are both Uncle Sam puppets also. It's a strange mix but my guess is blood is hticker then water here. Taiwan has already sent several ships to the islands in support of China.


I wish we had a better negotiator, more balanced, who could work things out peacefully there despite the bloody history by Japan during WWII.

WTFx10's picture

Panetta, Poor excuse for an Italian American. Wimpy fuck, I never got over that he disarmed the troops in Afghanistan before he talked to them. Zionist Cocksucker is scared , should change his name to Panettastein.