Similarly, in the Asia Pacific the future of regional order will be significantly defined by the character of Sino–Japanese relations. There have been progressive and regressive cycles since Tokyo and Beijing normalised relations in 1971, but since 2000, largely reflecting China’s rise and the evolution of the US–Japan alliance, Sino­–Japanese ties have been on a downhill slide.

Importantly, Chinese views of the US–Japan alliance have evolved since the end of the Cold War. During the 1990s, Chinese analysts viewed the US-Japan alliance as a net good. As a leading Chinese analyst, Wu Xinbo, has noted, views among Chinese analysts have shifted from an appreciation that the alliance was a ‘useful constraint on Japan’s remilitarisation’ during the 1990s, to the view in the mid-2000s that ‘enhanced security cooperation between Washington and Tokyo compromises China’s security interest’.

It was no coincidence that as the 21st century began and after decades of double-digit growth, China’s economy began to rival Japan’s. By 2010 China’s GDP of US$5.47 trillion surpassed Japan’s US$4.88 trillion economy.

As China’s economy took off and its military began to modernise, Japanese defence planners became increasingly concerned about the implications of China’s growing military prowess. Japan’s 2004 Defense Planning Guidelines first called out China in a public document, pointing to China’s ongoing military modernisation and its expanding maritime operations, noting that Japan would have to ‘remain attentive to its future actions’.

As China’s confidence and self-image as an emerging great power rose, Sino–Japanese ties became more contentious. In September 2010, a Chinese fishing trawler operating within Japan’s exclusive economic zone in the Senkaku/Diaoyu islands collided with two Japanese coast guard ships. In the ensuing controversy over the custody of the ship’s captain and crew, China cautioned Japan against taking ‘so-called law enforcement activities’ into Chinese waters.

This incident froze implementation of a 2008 agreement to jointly develop resources near the disputed Senkaku/Diaoyu islands, also marked a rise in tensions and underscored the political limits of Chinese accommodation. It also reflected a rise in anti-Japanese nationalism in China, increasingly a pillar of the Communist Party’s legitimisation.

The Senkaku/ Diaoyu islands dispute intensified two years later, in 2012, when Japan purchased three of the five islands from a private owner. High-level political and diplomatic contacts went into the deep freeze and large-scale anti-Japanese riots spread throughout China. Japanese Prime Minister Shinzo Abe’s visit to the Yasukuni shrine in December 2013 deepened the impasse.

Meanwhile, China’s increasing presence in the Senkaku/Diaoyu island chain and Japan’s declared Air Defense Identification Zone (ADIZ) heightened Japan’s security concerns with regard to ‘grey zone’ situations. As such, in 2013 Japan’s National Security Strategy described Japan’s security environment to be ‘ever more severe’, with China’s incursions into Japan’s ADIZ almost tripling the number of scrambles by Japan’s Air Self-Defense Force jets from 156 in 2011–12 to 415 in 2013–14.

To address Japan’s increasing security concerns, US President Barack Obama in April 2014 made it clear that Article 5 of the US­–Japan Alliance extended to the Senkaku/Diaoyu islands. This was a significant setback to Chinese efforts to drive a wedge into the alliance over the Senkaku/Diaoyu issue. At the same time, Japanese direct investment into China’s slowing economy plunged, down nearly 50 per cent in 2014 and a further 16 per cent in the first half of 2015.

Over the course of 2014, diplomats in Tokyo and Beijing explored paths towards accommodation that both Prime Minster Abe and Chinese President Xi Jinping could accept. In an act of inspired diplomacy, in November 2014 the two sides agreed to a four-paragraph document whose texts differed creatively on the sensitive issue of Senkakus/Diaoyu. Two days later, Abe shook hands with a stone-faced Xi.

Behind the ups and downs of this relationship are competing visions of order and leadership in the Asia Pacific region.

In the early 2000s, China supported a version of the East Asia Summit (EAS) that excluded the United States, Australia and New Zealand, which Japan successfully contested. Twelve years later, Xi called for a new ‘Asia for Asians’ security architecture, one that departed from the ‘outdated thinking’ of the Cold War. He added that ‘no country should attempt to dominate regional affairs or infringe on the legitimate rights and interests of other countries’. Thus Beijing effectively cautioned the US and Japan not involve themselves in the South and East China Sea disputes.

While China remains in the old Bretton Woods institutions and similar associated institutions such as EAS and the Asia Pacific Economic Cooperation (APEC) process, Beijing’s assertiveness now includes the promotion of parallel institutions as a hedging strategy. The One Belt One Road concept, the Asian Infrastructure Investment Bank, the Shanghai Cooperation Organization and Conference on International Confidence Building in Asia all pose new challenges for the regional order and the US–Japan alliance.

Early in his second administration, Abe set out five principles for Japanese diplomacy, including ‘universal values’ and governance of the maritime commons by ‘laws and rules, not by might’. In subsequent remarks on territorial disputes in the South and East China Seas, Abe has focused on peaceful resolution and avoiding threats and use of force, emphasising the vital importance of the Japan–US alliance in maintaining the safety and prosperity of the Asia Pacific region; of expanding ties between ‘Japan and America’s other allies and partners; of strengthening Japan’s ‘ties with maritime Asia’. Abe has also shifted Japan’s defences, stationing troops on Southwest islands.

Abe and Xi met on 22 April in Bandung during the Asia–Africa Summit. Additionally, Abe’s 14 August speech to mark the 70th anniversary of the end of World War II appears to have paved the way for a Beijing summit later this year. But, as Beijing prepared for China’s 3 September victory parade, it was clear that issues relating to history, territory, security and regional vision will continue to trouble this relationship. If the past decade is a prologue, the best that can be hoped is that rationality prevails in managing the critical issues that stalk the bilateral relationship and the region.

The likely trajectory of Sino–Japanese relations depends on China’s approach to regional order. Currently there is a bifurcated relationship marked by economic cooperation and security competition. This duality characterises East Asia writ large. Over the coming decade, whether China joins Trans-Pacific Partnership and how it responds to instability on the Korean peninsula will both be inflection points in shaping Sino–Japanese ties. More broadly, whether or not US–China relations are more cooperative than competitive and whether they forge a framework for strategic stability will be a bellwether for the future success of such ties.

Robert Manning is a senior fellow of the Brent Scowcroft Center for International Security at the Atlantic Council. He served as a senior counsellor from 2001 to 2004 and a member of the US Department of State Policy Planning Staff from 2004 to 2008.

James J. Przystup is senior fellow and research professor in the Institute of National Strategic Studies at the National Defense University.

This article appears in the most recent edition of the East Asia Forum Quarterly, ‘Japan–China Relations‘.