Japan’s arrest in September last year of a Chinese fishing boat captain for ramming Japanese Coast Guard vessels in disputed waters sparked renewed tensions with China. China’s hard-line response to the arrest and Japan’s obsequiousness during the crisis was, in many ways, a reflection of changing power relations between the two Asian giants. Stung by domestic criticism of its kowtowing and with the recognition that Japanese territories could come under threat from its giant Asian neighbour, Tokyo has recently announced plans to deploy troops to the disputed islands. The deployment raises the prospects of future confrontation. But does this move serve Japan’s broader strategic interests? It may be time for Japan to think the unthinkable and consider the merits of handing over the Diaoyu (Senkaku) Islands to China. 

The most fundamental reason why the Japanese government should consider compromising in the territorial dispute is the shift in power relations that is occurring between the two countries. China’s rapid economic and military growth over the past two decades has come at a time of unprecedented (in the postwar era) socioeconomic decline in Japan. This change in fortunes is most obviously manifested in China’s recent usurpation of Japan’s ranking as the world’s second largest economy. While China is not without its own socioeconomic problems, Japanese leaders have been unable to craft durable solutions for the nation’s longstanding woes. It does not require much imagination to see current trends continuing, at least into the foreseeable future.

Of course, China’s gradual ascent towards becoming the dominant regional power is alone not enough to force Japanese territorial concessions. It is what is taking place on an ideational level in China that should prompt Japanese leaders to reconsider their stance on the disputed islands. The CCP can be credited with putting China on the path to prosperity but its rule rests on shaky foundations. As a communist party presiding over an increasingly market-oriented economy, the Party lacks political legitimacy and has had to resort to an interrelated and potentially unstable mix of developmentalism and nationalism in order to maintain control. Many of the younger generation in China are increasingly being inculcated with staunchly nationalistic views. In the coming years, today’s young firebrands will replace the present batch of adroit and pragmatic technocrats, and in doing so could help push Chinese foreign policy in a more assertive direction, either as elites occupying positions of power within the Party-State or as general public opinion. Japanese concessions over the islands could generate large reservoirs of goodwill amongst the Chinese who, rightly or wrongly, see the territorial dispute in the emotion-charged context of past Japanese aggression.

Moreover, Japan doesn’t really need the islands, which neither it nor China have unquestionable historical and legal claims. These rocky outcrops are located far from Japan’s main population centres, are uninhabited, and therefore do not evoke anywhere near the same level of emotion for Japanese as Okinawa did during its occupation and the Northern Territories. Local Japanese fishers might feel aggrieved by the loss of the islands but could still gain access to important fisheries. China and Japan have already successfully negotiated fisheries agreements in the past that cover neighbouring waters. Including the islands’ fisheries in a new agreement would just expand the geographic zone of cooperation between the two. For some, ceding control of the islands would increase China’s strategic footprint in the region by offering a base from which to project power, making it easier to interrupt sea lines of communication during a future conflict or even to attack Taiwan. However, China already possesses the ability to harass enemy shipping in the East and South China Seas and Taiwan militarily and would not be further advantaged significantly by controlling the islands.

Such a grand gesture from Japan would not automatically guarantee smooth relations with China. Any goodwill generated from a Japanese compromise over the islands would likely be undermined if other history-related irritants such as Yasukuni Shrine visits and history textbooks continue to fester. Unlike some past incidents involving Japan’s generous economic assistance to China, the Chinese public would need to be made aware of Japanese generosity and not be led to think the compromise was inevitable and belated recognition of the need to right past wrongs. Nations rarely voluntarily cede territory and a decision to hand over the islands to China would politically be immensely unpopular in Japan. It would most certainly earn the ire of Japanese nationalists who might threaten to sabotage such a move. Any Japanese public anger, however, would soon subside and while Japan’s nationalists are prominent, they only occupy the margins of politics and their rage could be managed. It is better to aggravate a few thousand Japanese rightists today than continue to create conditions for the rise of potentially millions of anti-Japanese nationalists in China in the future.

A Japanese handover of the disputed Senkaku/Diaoyu Islands to China would encounter obstacles but it is likely to take the steam out of virulent anti-Japanese sentiments in China and would be a first step in helping both nations move beyond the distrust and acrimony of the past.