‘Stable Instability': China-Japan Dilemmas in the Shadow of Sino-American Rivalry

The Diplomat

3 hours ago

Three enduring dilemmas define the complex relationship between Asia's two largest economies as they mark the 80th anniversary of World War II's end.
Japanese Prime Minister Ishiba Shigeru (left) meets with Chinese President Xi Jinping on the sidelines of the APEC Summit in Lima, Peru, Nov. 15, 2024.
As Asia-Pacific nations grapple with an increasingly complex security environment, Japan and China find themselves locked in what can be described as 'stable instability' – a relationship characterized by sustained economic engagement alongside persistent political mistrust and security tensions. This paradoxical state has become the defining feature of bilateral relations between Asia's two largest economies, particularly as they commemorate the 80th anniversary of the conclusion of World War II in 2025.
Despite strong economic ties, with bilateral trade reaching $292.6 billion in 2024, China-Japan relations remain strained by geopolitical disputes, wartime history, and territorial issues. This economic interdependence coexists uneasily with deep-seated public mistrust and strategic competition, creating a relationship that defies simple categorization as either cooperative or adversarial.
Understanding this complex dynamic requires examining three structural dilemmas that have come to define contemporary China-Japan relations. These enduring challenges reveal why the relationship has settled into its current state of stable instability and what this means for regional security and prosperity.
Interdependence vs Security: The First Dilemma
The first dilemma centers on the tension between economic interdependence and security vulnerabilities. Japan and China have developed one of the world's most extensive economic relationships, with deeply integrated supply chains spanning automotive parts, semiconductor materials, and consumer electronics. China remains Japan's largest trading partner, a position that has persisted despite periodic political tensions and calls for economic decoupling.
However, this economic intimacy has increasingly become a source of strategic anxiety rather than just mutual benefit. The concept of 'weaponized interdependence,' as described by Henry Farrell and Abraham Newman in their seminal work on how global economic networks shape state coercion, perfectly captures this dilemma. Dependencies on critical materials, advanced technologies, and production networks that once represented pure economic efficiency now carry potential security risks and political leverage.
Japan's concerns have been amplified by China's use of economic tools for political purposes, such as restrictions on Japanese seafood imports following the Fukushima wastewater release. China announced in June this year that it would resume imports of some Japanese seafood products that had been suspended due to the discharge of treated water from Tokyo Electric Power Company's Fukushima Daiichi Nuclear Power Plant, but seafood from 10 prefectures, including Fukushima, remains subject to import bans. Such incidents underscore how economic relationships can quickly become instruments of political pressure.
This dynamic has led Japan to pursue what it terms 'economic security' – a policy framework formally integrated into its 2022 National Security Strategy. The strategy defines Japan's economic security as ensuring 'Japan's national interests, such as peace, security, and economic prosperity, by carrying out economic measures,' reflecting a recognition that economic and security considerations can no longer be separated.
The challenge lies in maintaining the benefits of economic cooperation while mitigating the vulnerabilities that come with interdependence. Neither complete decoupling nor naive trust represents a viable path forward, forcing both nations to navigate an uncomfortable middle ground where economic collaboration must coexist with strategic hedging.
Alliance Strengthening vs Regional Leadership: The Second Dilemma
Japan's second structural dilemma involves balancing its deepening alliance with the United States against its aspirations to play a constructive role in regional stability. This tension has been thrown into sharp relief by Japan's dramatic defense transformation, outlined in this same 2022 National Security Strategy and accompanying documents.
The National Security Strategy pledges to increase defense spending from roughly 1 percent of GDP to 2 percent by fiscal year 2027 and calls for Japan's armed forces to acquire counterstrike missile capabilities. These changes represent the most significant shift in Japan's defense posture since World War II, effectively moving beyond the constraints of purely defensive capabilities.
From China's perspective, these developments appear to confirm fears of Japan's participation in the U.S.-led containment strategy. The East China Sea remains a flashpoint due to territorial disputes over the Senkaku Islands, known as the Diaoyu in China, with China's growing military presence raising concerns in Tokyo. Recent incidents, including a Chinese JH-7 fighter-bomber flying within 30 meters of a Japanese intelligence aircraft in July 2025, illustrate how quickly tensions can escalate.
Yet Japan simultaneously seeks to position itself as a responsible stakeholder in the regional order. Through initiatives like the China-Japan-South Korea Trilateral Cooperation Secretariat (TCS) and its engagement with ASEAN, Japan attempts to demonstrate that its enhanced defense capabilities serve regional stability rather than destabilization. Recent diplomatic initiatives, including the meeting between Foreign Minister Iwaya Takeshi and Chinese Foreign Minister Wang Yi during ASEAN-related foreign ministers' meetings in Malaysia on July 10, suggest both sides recognize the need for dialogue even amid strategic competition.
This balancing act reflects Japan's broader strategic challenge: how to fulfill alliance commitments while maintaining the flexibility to engage constructively with all regional stakeholders. The Trump administration's unpredictable approach to China adds another layer of complexity, as Japan seeks to influence how China-U.S. competition develops while emphasizing to Washington that Japan cannot completely sever ties with its largest neighbor and trading partner.
Mutual Understanding vs Emotional Reactions: The Third Dilemma
The third dilemma involves the growing disconnect between the imperative for mutual understanding and the emotional polarization amplified by digital media. Social media algorithms and online echo chambers have created information environments that often prioritize sensationalism over nuance, making thoughtful dialogue more difficult even as its importance grows.
Public opinion data reveals the depth of this challenge. Japanese surveys consistently show that those who feel 'no affinity' toward China significantly outnumber those who think positively about the relationship. Today, 84.7 percent of Japanese respondents express that they 'do not feel close' to China – a dramatic reversal from the early post-normalization period, when favorable sentiment reached nearly 80 percent. This shift reflects not just policy disagreements but the accumulation of negative impressions reinforced by digital media consumption patterns.
The problem extends beyond public opinion to the operational level of crisis management. While a China-Japan defense hotline was established in 2023, its effectiveness remains untested in severe crises. The rapid pace of military encounters in the East China Sea, where split-second decisions can escalate tensions, demands robust communication mechanisms backed by mutual trust, precisely what remains in short supply.
Paradoxically, people-to-people exchanges have shown resilience. Tourism and educational exchanges have rebounded from pandemic lows, with China easing its stance on various issues, including the resumption of imports of Nishikigoi tropical fish and the reinstatement of visa-free entry. However, these positive developments at the societal level have not translated into improved political relations or reduced strategic mistrust.
The challenge is compounded by the reality that both governments face domestic political pressures that reward tough rhetoric toward the other country. With Japan's House of Councillors election having taken place in July 2025, Prime Minister Ishiba Shigeru continues to face constraints, given that the majority of the Japanese population is critical of China. Similar dynamics operate in China, where nationalist sentiment limits leaders' flexibility in making concessions.
Embracing 'Stable Instability': The Art of Perpetual Management
These three dilemmas illustrate why China-Japan relations have settled into their current pattern of stable instability. Rather than representing a temporary phase that will eventually resolve into clear cooperation or confrontation, this may be the enduring character of the relationship – one that requires constant management rather than definitive resolution.
As reflected in their November 2024 meeting, Ishiba and Chinese President Xi Jinping confirmed that Japan and China continue to share a broad direction of comprehensively promoting a 'Mutually Beneficial Relationship Based on Common Strategic Interests' and building 'constructive and stable Japan-China relations.' The 80th anniversary of World War II's end provides a symbolic opportunity for both nations to demonstrate mature leadership, but the structural factors driving stable instability remain powerful.
Success will likely depend on both countries' ability to compartmentalize different aspects of their relationship. Economic cooperation, climate change mitigation, pandemic preparedness, and cultural exchange can proceed even when security competition continues. Recent examples include the renewal of the bilateral currency swap deal worth 200 billion yuan (about $28.13 billion) and a Japanese business delegation visiting China for the first time since 2019.
The path forward requires acknowledging that China-Japan relations exist in a multipolar context where neither country can afford to view the other purely through the lens of bilateral dynamics. Regional institutions, global challenges, and third-party relationships all shape the bilateral relationship in ways that create both constraints and opportunities.
Rather than seeking to resolve the fundamental tensions that define the relationship, both countries might be better served by establishing mechanisms to manage these tensions constructively. This means strengthening crisis communication channels, maintaining economic dialogue even during periods of political dispute, and creating space for civil society exchanges that can withstand periodic government tensions.
The concept of stable instability, uncomfortable as it may be, offers a more realistic framework for understanding China-Japan relations than expectations of either strategic partnership or inevitable conflict. In an era of growing global complexity, managing such relationships may be among the most essential diplomatic skills both nations can develop.
As Japan and China navigate the remainder of 2025, their ability to demonstrate that major powers can maintain stable relationships despite fundamental differences will have implications far beyond Northeast Asia. In a world increasingly characterized by multiple centers of power and persistent areas of competition, the China-Japan model of stable instability may prove more relevant than traditional notions of either alliance or rivalry.