Shifts in the regional power balance are becoming more pronounced in East Asia as a result of the ongoing changes in relations between two important players — China and Japan. What are the contributing factors to the changes? The People's Republic of China (PRC) has been rising rapidly since the 1990s, in comparison to Japan's economic stagnation during the same period. Japan is still the second largest economy in the world, but the PRC's enhanced economic relations with Asian countries, combined with its diplomacy, have been successful in eroding into the power and influence hitherto enjoyed by Japan.

Changes in Sino-Japanese relations also have a military dimension. No doubt, China's declared policy for the present, arising out of the perceived necessity to have a stable international and regional environment so that it can concentrate on its domestic development, is for pursuing a non-confrontational foreign policy course. Its central message to the outside world is that the PRC's “peaceful development” does not pose a “threat” to other countries. However, because Beijing is at the same time pursuing an active military modernization drive, East Asian nations in general and Japan in particular, are responding with some scepticism to the “peaceful development” message. Tokyo is reacting by beginning to revamp its defence, security and foreign policies, geared not only to address the issue of the rise of China, but also the threat coming from North Korea's development of nuclear weapons and ballistic missiles. The growing nationalism in Japan is facilitating such attempts to reformulate policies. As China and Japan strive for regional leadership by competing in a variety of fields like politics, military, economy and energy, their rivalry raises questions about future stability and equilibrium in East Asia.

The History Issue

A political issue which divides Japan on one side and significant parts of East Asia on the other relates to Tokyo's wartime role. China and the two Koreas in particular want Tokyo to atone for its wartime conduct and avoid policy measures which may encourage right wing and militarist elements in Japan.