During the recent US-China summit, one of the few issues on which Chinese tempers flared was that of a small group of rocks in the East China Sea – islands that the Japanese call the “Senkaku” and the Chinese call “Diaoyutai”. Unless handled more judiciously by leaders in both Beijing and Tokyo, there is real potential for a rupture in relations over the ownership of these barren islands.
Behind the scenes, all the key players in the rest of Asia and the US are urging Japan and China to handle the matter carefully, to let cooler heads prevail and change the subject. Still, the situation remains serious – if little understood. It has the potential to create a crisis that could rock northeast Asia, and have an impact on the global economy.
For instance, recent economic analysis suggests that the boycott and financial retribution resulting from the tensions around these islands are now greater than the economic trauma that has followed in the wake of the nuclear disaster in Japan that struck Fukushima prefecture in March 2011.