China-Japan Relations at a Crossroads Amid Strategic Challenges

“One can change friends, but one cannot change neighbors”: This quote from a former Indian prime minister applies to China and Japan as well. Given their geographical proximity, both countries have a pressing need to find ways to cooperate and coexist.

In late July, Chinese Foreign Minister Wang Yi met with his Japanese counterpart, Kamikawa Yoko, on the sidelines of the ASEAN Foreign Ministers’ conference in Laos, ahead of the East Asia Summit and the security-focused ASEAN Regional Forum. Wang reiterated that China-Japan relations are at a “critical stage.” The minister went on to talk about contentious issues like the detention of Japanese nationals in China, limits on semiconductor exports, and China’s import ban on Japanese seafood.

The bilateral relationship has long been plagued by wartime crimes, but amid recent strategic maneuverings, diplomacy between these two Asian superpowers has become more complicated. China and Japan are currently embroiled in a number of conflicts, including the territorial dispute over the Senkaku/Diaoyu Islands, a constant source of tension. Their relationship is also strained by economic challenges, such as China’s prohibitions on importing Japanese seafood after the release of nuclear wastewater from Fukushima, and Japan’s export limits on semiconductors. Geopolitical alignments further heighten tensions; China’s worries about regional security dynamics are compounded by Japan’s close links to the United States.

The relationship is complicated and deeply influenced by history, including Japan’s invasion of China and the war crimes carried out during that conflict, such as the Nanjing Massacre. The past still affects perceptions and interactions between the two countries. Japan has failed to fully address and acknowledge its wartime crimes, irking the Chinese people.

For instance China raises continuous objections to the visits and offerings made at Tokyo’s Yasukuni Shrine, which commemorates 2.5 million Japanese war dead – including 14 wartime leaders convicted as war criminals. Most recently, on the anniversary of Japan’s surrender in World War II, Japanese Prime Minister Kishida Fumio sent an offering to Yasukuni and several members of his Cabinet, including Defense Minister Kihara Minoru visited the shrine. In response, China “lodged serious protests to the Japanese side” over what Beijing called “an erroneous attitude towards historical issues.”

A Foreign Ministry spokesperson told reporters that “China urges Japan to honor its commitment of recognizing and reflecting on its history of aggression, stay prudent on historical issues such as the issue of the Yasukuni Shrine, make a clean break with militarism, stick to the path of peaceful development, and take concrete actions to earn the trust of its Asian neighbors and the international community.”

Despite a deeply contentious past, China and Japan have engaged economically as well as diplomatically for over 50 years. After the normalization of Sino-Japanese relations in 1972, four major documents were signed that serve as the cornerstone of their relations: the China-Japan Joint Statement of 1972, the China-Japan Treaty of Peace and Friendship of 1978, the China-Japan Joint Declaration of 1998, and the China-Japan Joint Statement on the Comprehensive Promotion of a Mutually Beneficial Relationship Based on Common Strategic Interests issued in 2008.

Over the years, Japan has contributed significantly to China’s modernization, particularly in the 1970s and 1980s through investment, technological transfer, and economic aid. These periods of cooperation boosted economic growth in both countries and also stabilized their relations, fostering a level of interdependence. Further strengthening their economic ties, the countries integrated their economies through trade, investment, and regional initiatives like the ASEAN Plus Three framework.

Today, however, trade and technology have become a point of ongoing tension between China and Japan. For example, Japan had announced export restrictions on 23 types of semiconductor manufacturing equipment, aligning with U.S. policy. Although Japan did not explicitly target China, this move – which requires manufacturers to obtain export clearances for every region – is anticipated to impact Chinese companies' access to cutting-edge chipmaking technologies.

Japan’s action of stopping shipments of semiconductor manufacturing equipment made by companies such as Nikon Corp and ASML Holdings bolsters the U.S. strategy to curtail China’s technology sector. This decision was aimed to stop China from manufacturing advanced chips that would improve its military capabilities. Considering the importance of semiconductors to China's economic and technological advancement, restrictions on this sector would significantly impact a number of industries, including electronics, automobiles, and telecommunications.

In addition, China’s concern over Japan’s release of treated wastewater from the Fukushima nuclear facility led to a ban on all Japanese seafood imports in 2023. Along with affecting Japan’s seafood industry, the ban emphasizes the fragility of trade relations between the two nations.

Despite these challenges, China and Japan remain economically intertwined. China stands as Japan’s largest trading partner, while Japan plays a crucial role as a major provider of technology and investment to China. In fact, China ranks as Japan's third-largest investment destination, with direct investments reaching over 1 trillion yen (equivalent to $9.2 billion) in 2022, marking a 4.4 percent increase from 2021. Both countries can enjoy economic incentives if they settle their differences amicably in order to prevent adverse effects. The primary challenge to their stability is striking a balance between security concerns and the economic advantages.

Japan comes under the security umbrella of the United States. The U.S.-Japan Mutual Security Treaty signed in 1951 ensures U.S protection to Japan in the event of an attack, enabling Japan to concentrate on its economic growth while depending on U.S. military support. Recently, this security partnership has grown even stronger, as pointed out by U.S. President Joe Biden and Japanese Prime Minister Kishida Fumio in a joint statement. The two leaders praised the “new era of U.S.-Japan strategic cooperation,” with an emphasis on enhancing military cooperation, working together to create modern defense technologies, and integrating their defense communication networks.

China is concerned about the changing security dynamics between the United States and Japan, and this has an impact on China-Japan ties. China may view the U.S. and Japan’s growing military cooperation as a strategic challenge, which could result in higher tensions between the two neighbors.

China and Japan’s bilateral relationship is at a critical juncture as economic interdependence exists with historical grievances, territorial issues, and strategic difficulties. While tensions over security and trade persist, the enduring proximity and intertwined economies of the two nations require ongoing cooperation and dialogue. The challenge that lies ahead for the two countries is managing the tensions as well as maintaining stability and fostering mutual economic growth. In the security realm, the Japan-U.S. alliance will continue to shape the trajectory of China-Japan relations, making it imperative for both sides to balance their strategic interests with the economic benefits of cooperation.

However, the prospects of cooperation between China-Japan remain uncertain. As the world watches, both nations need to decide between the paths of rivalry or coexistence. These decisions will affect their bilateral relationship as well as the stability of the Asia-Pacific region.