China has many border disputes. However, Beijing’s recent decision to place an “Air Defense Zone” through part of the East China Sea which Japan and China both claim has been quite serious and a major source of conflict in the region. This zone covers the Senkaku/Daiyou islands, claimed by both nations and Taiwan, and the motive behind this action thought to be a combination of antagonizing Japan and attempting to weaken US-Japan ties. It prohibits the free flight of foreign government aircraft and complicates civilian air transport. The US has responded by flying B52 Bombers through the zone to challenge its existence.
This dispute has existed since the US gave Japan the islands in a World War II settlement and specifically protected them in a 1952 Security Agreement. The US has warned Beijing that the United States would fully support Japan in any military engagement that could erupt. The islands and area around them are important to both countries due to proximity to important global shipping lanes and oil and gas reserves. Controlling them is increasingly important as an energy source and is crucial to increasing regional power and leverage over other nations.
The conflict over the islands has been ongoing for decades but has flared up severely in the past 3 years, sparking nationalist outbursts in both countries. Provided no military conflict erupts, the short term economic effect of all bluster from all sides should be minimal. However, should nationalism prevail in both countries and a military conflagration ignite, it could quickly become a world war. While that is an unlikely outcome, it cannot be ruled out based on the rapidity and severity of recent escalations. This is a situation that will have to be closely monitored by parties around the world. Certainly, this conflict will increasingly affect American diplomatic strategy and the placement of American military assets.
Sources:
http://www.theguardian.com/world/2013/nov/23/china-airspace-restrictions-japanese-senkaku
http://www.cnn.com/2013/11/25/world/asia/china-japan-disputed-islands/
http://www.theguardian.com/world/2013/nov/24/us-warns-beijiing-island-dispute-senkanus
Hard power could escalate war and generally has been the deciding factor in arguments between nations. China and the United States could both use soft power tactics in this case. Placing trade embargoes on one another could have significant impacts on both economies. Placing a tariff on manufactured goods for example could severely hurt exports. China has a large army, yet I don’t think it has the capabilities to take on the US army. It only recently acquired an old Soviet aircraft carrier… yet it still hasn’t equipped it with everything necessary for it to be fully functional.
I seem to recall that last year China also had a row with Japan these same islands. I wonder if this new escalation of tension is the result of the change of power in the Chinese government.
I worry primarily about the spiral of tensions. I remember learning in Professor Patch’s Diplomacy in Europe from WWI to the 1970s that this was one of the leading causes of “hot” wars. I think this saber rattling is to distract Chinese citizens from internal problems, unless that internal problem is Japan’s desire to export more (Currency depreciation) and more to China, and its leading export markets.
I worry about the spiral of tensions as well like Mark. We don’t need any “hot” wars.