To those with knowledge of Sino-Japanese relations, the locking of horns by the two sides in the wake of the massive anti-Japanese demonstrations across China does not come as a surprise. It was a natural fallout of tensions ? resulting from disputes about history and territory ? that had been simmering for a long time.

The ugliness of the protests, which were ignited by Japanese approval of school textbooks that China says ?glorifies? Japan?s wartime behaviour, was further stoked by the announcement that Japan would start allocating rights for test-drilling in a disputed area of the East China Sea. China called Japan?s plan to allow gas exploration in disputed waters a serious provocation.

The two sides have traded barbs. Beijing says Tokyo is at fault for mishandling its own ?history of aggression?. Japan, on the other hand, wants China to accept the blame for letting the protests get out of hand. Tokyo believes the protests could not have happened without approval from local officials. The Japanese foreign minister, Nobutaka Machimura, flew to Beijing for what were expected to be difficult talks. He demanded an apology and compensation from China. But the Chinese foreign minister, Li Zhaoxing, said that the Chinese government had never done anything for which it had to apologize to the Japanese people. ?It shouldn?t be us who should apologize. It is Japan who should,? said the Chinese vice-foreign minister, Wu Dawai. The talks ended with a vague promise to ?work towards? a meeting of Chinese premier Wen Jiabao, and his Japanese counterpart, Junichiro Koizumi.

Both sides are aware of the need for showing restraint. China has sought to rein in the anti-Japanese sentiment that sparked the protests. Japan too avoided escalating the war of words, saying that a dialogue was needed to resolve the feuds. China has also called for talks. But the sensitivities on both sides are such that this is easier said than done.

The Sino-Japanese relationship is the key bilateral relationship ? potentially the most disruptive ? that is most likely to affect stability throughout east Asia. Japan and China are suspicious of each other?s aims. Needless to say, the suspicions will remain and influence their threat perceptions as well as policies. Japan fears a rising China and wants to prevent it from gaining dominance in Asia. Both Tokyo and its top ally, Washington, are uneasy about the European decision to lift the 16-year-old embargo on arms sales to China, imposed after the Tiananmen Square massacre of 1989.

China too has apprehensions concerning Japan?s role and policies. In the post-Cold War period, China has come to view Japan as one of its most important adversaries. China?s security concerns vis-?-vis Japan can be summed up as follows: the possibility that Japan might become a major military power, the hidden agenda of a US-Japan security alliance, and the possibility that Taiwan might be incorporated into the scope of Japan-US defence guidelines. Japan?s interest in ballistic missile defence, its military engagement with North Korean vessels, and continued refusal to specify its defence arrangement with the United States of America on the defence of Taiwan have all had an unsettling effect on Beijing. Beijing views the US-Japan defence guidelines as aimed at itself since they cover waters adjoining Japan, including the Taiwan Strait. Beijing sees Tokyo aligning itself with a US-led circle of containment that stretches from India via southeast Asia and Australia round to Japan. According to the Chinese, a redefined US-Japan alliance presages a Washington-Tokyo condominium on regional affairs, with an aim to marginalize China.

On May 28, 1998 China?s assistant foreign minister, Wang Wei, met the Japanese ambassador, Tanino Sabutaro, and asked the Japanese to abandon their ?Cold War? mentality and confine cooperation to bilateral relations without having anything to do with Taiwan or China?s sovereignty. Again, during his visit to Tokyo in November the same year, the Chinese president, Jiang Zemin, pressed for a private acknowledgement that the revised security guidelines did not cover Taiwan. But to Jiang?s disappointment, the Japanese made no such promise. Not surprisingly, an article in the official China Daily in 2001 warned that further solidification by Tokyo of the US-Japanese security alliance would constitute ?a threat to security in East Asia?.

China sees Japanese ambitions as a key obstacle to its goals. Beijing may not welcome a continuation of US strategic presence in the Asia-Pacific region because of the tensions that it might bring to Sino-US relations. But it has actually done so, at least implicitly, believing that it would have a restraining effect on Japan?s military development programme. Now, instead of relying on American foreign policy, China wants to develop its own capability to contend with Japan?s growing regional presence.

China worries that militarily Japan is going from strength to strength. Japan already has the world?s third largest defence budget, and its self-defence forces is a euphemism for what, in fact, is a small but powerful state-of-the-art military machine. In the wake of the September 11 attacks on the US, China has thought it wiser to reserve its comments about Japan?s new military role. Beijing has also been reticent about America?s new military foothold in central Asia, even while it applauds the war on terrorists who have stirred up trouble from time to time in its restive province of Xinjiang.

A dominant school of thought in China is that ?militarism? will play a significant role in Japanese politics and that the expansionist instinct will once again dominate Japanese foreign policy. This has been supported by recent increases in Japan?s military capabilities and calls to revise the country?s peace constitution. In May 2002, Japan?s chief cabinet secretary, Yasuo Fukuda, went to the extent of hinting that Japan might revise the ?three non-nuclear principles? it introduced in 1971. Fukuda?s comment came barely a week after another senior official said publicly that Japan could legally possess nuclear weapons so long as they were ?small?. Despite Koizumi?s affirmation of Japan?s policy against building or possessing nuclear weapons, a major shift in security thinking is under way, enough to ring alarm bells in Beijing.

However, a clash between China and Japan is yet to loom on the horizon. The leaders of China, Japan and South Korea, which form the ASEAN-plus-three grouping, now meet one another regularly. Japan and China too have been learning to accommodate each other. In May 1993, for example, the two countries agreed to establish a bilateral security dialogue, and in January 1995, held the second round of security talks.

A further confirmation of the desire to avoid confrontation was the assurance given by the Japanese foreign minister, Makiko Tanaka, in 2001 that Tokyo would issue no new visas to the Taiwanese ex-president, Lee Teng-hui, whose visit in April 2001 for treatment had enraged China. Koizumi too made a trip to China in October 2001 in an attempt to mollify the Chinese leaders who had been upset by his visit to the Yasukuni shrine that honours the Japanese war dead, including convicted war criminals such as the former prime minister, Hideki Tojo. Koizumi apologized for Japan?s wartime excesses, symbolically paving the way for the normalization of Sino-Japanese relations.

It would be wrong to think, though, that Tokyo?s diplomatic drive has melted Beijing?s opposition to Japanese militarism. Koizumi?s annual visit to Yasukuni continues ? though he gave it a miss this year. Beijing has called Koizumi?s annual visits ?the crux? of the difficulties between the two countries.

Confidence-building talks are desperately needed at this hour to lower, if not completely remove, the barrier of mutual suspicions. The economic ties have already started having a sobering effect. In 2002, for the first time, China replaced the US as Japan?s biggest source of imports while Japanese exports to China surged by 39.3 per cent. Not only did China account for 32 per cent of Japan?s 2003 export growth, capital spending was driven by expansion in industries trading with China.

The two countries know that they cannot neglect each other. Both have to launch damage control exercises whenever there is a crisis. For China, the first priority is peace in its neighbourhood without which its goal of economic development will be impossible to realize. Peace is as important in Japan?s agenda if it does not want to go back to the days of economic uncertainty. Each side must be willing to be sensitive to the other?s problems which have their roots in history. Handling issues emotionally will not help matters at all. Koizumi?s apology at the Asian-African summit in Jakarta is a step in the right direction.

China and Japan may find a way out of their worst dispute in decades, but the tension and mutual mistrust are too deep-rooted to be wished away overnight.