China and Japan, despite their mutual economic interests, are currently going through a period of brinkmanship that recalls their old regional rivalry. The escalation comes amid a warlike discourse in China. What had begun as a minor dispute is turning into a gathering storm, as both appear determined to force the other to give ground.
The backdrop for the dispute is the changing military and economic dynamics in the region. Japan, which had risen from utter defeat in World War II to become a prosperous global economic power, has now fallen into economic despair. In contrast, Beijing brims with confidence in the belief that the century belongs to China — with the return of the Diaoyu or the Senkaku islands as a star.
Though Japan is richer than China on a per-capita basis, its economy has been stagnant for years and contracted again as it has been hit by a slowdown in exports to China after the island dispute erupted in August. However, China's military still lags behind the Japanese sophistication in weaponry and training, but Japan's edge is diminishing.