Dangerous moves in the East China Sea could bring Japan, China to armed conflict

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The Japanese surveillance plane is an hour into its flight when it spots the first Chinese flags of the day, red banners atop a quartet of fishing boats deep in Japan's territorial waters.

The P-3 Orion aircraft, designed for hunting submarines, banks for a closer look at the bobbing blue and white ships. From a seat in the plane, high above the East China Sea, the boats look like chess pieces, being advanced up an endless board of black water and white-capped waves.

The Chinese fishing craft are mere pawns, pushing forth in groups to test the response from the Japanese side as Beijing tries to assert its claim to a quintet of islands, and their surrounding waters, that Japan has controlled for decades. Later that day, the rooks and knights appear – China Marine Surveillance craft, sent nearly every day to police the area as if it were Beijing's to patrol. They are cautiously matched ship for ship by boats from the Japan Coast Guard, the two sides often closing to within 100 metres of each other but never – yet – colliding.

Out of sight, for now, are the truly powerful pieces, the warships of two of the world's most potent navies. As the showdown over the ownership of the uninhabited islets in the East China Sea drags into its fourth month, neither side is showing signs of backing down. And with nationalism rising on both sides amid a delicate transition of power in China and ahead of a charged election in Japan, there's growing worry that one side or the other will be tempted to escalate the situation – potentially bringing the world's second and third-largest economies into armed conflict.

It's a contest of nerves. Chinese ships sailing near the islands have begun displaying digital signs warning Japanese craft: "You are in waters administered by the People's Republic of China. You are already breaching the law. Move away immediately." China's state-controlled media have reported that active-duty warships are being transferred from the navy to its China Marine Surveillance fleet, raising the likelihood of gunships being deployed to the disputed waters. Last week, five Chinese warships sailed through Japan's Miyako Strait, just north of the disputed islands, on their way to an unannounced exercise.

The almost daily appearance of the Chinese boats, often sailing right into Japanese-controlled waters around the islands, and the fact the Japanese are unwilling or unable to stop them, are changing the status quo that has held here for the past 41 years, ever since the United States ended its post-Second World War occupation of Okinawa, and handed administration of the entire prefecture – including the contested islands – back to Japan.

"The Chinese navy and military presence is expanding day by day," Rear-Admiral Isao Ooseto, commander of Fleet Air Wing Five, the Japanese naval unit that deploys the P-3 surveillance planes, said in an interview at the navy's Okinawa headquarters.

Our plane returned there following a two-hour flight during which it sent back a steady stream of reports on the ships it saw near the disputed waters. "These territorial waters are garnering a lot of attention, and these waters are our responsibility, and we are on high alert," Rear Adm. Ooseto said.

Japanese Prime Minister Yoshihiko Noda and Chinese Premier Wen Jiabao both attended a recent East Asian summit in Cambodia, but would not even meet each other. U.S. President Barack Obama was left to plead with the two sides to reduce tensions – his government was recently handed a report written by a delegation of veteran officials who warned Japan and China could be headed towards war over the islands, situated southwest of Okinawa and north of Taiwan, that Japan calls Senkaku and China calls Diaoyu.

The daily game of dare at sea unfolds in parallel with political dramas in Beijing and Tokyo.

The island dispute, and the swelling anti-Japanese sentiment in China, has been used by the nationalist left of the Communist Party to promote its cause during the once-a-decade transfer of power.

The showdown with Japan in the East China Sea will be one of the first tests faced by new Communist leader Xi Jinping, who on Nov. 15 also assumed control of the country's military. But it is not the only flashpoint. China is also involved in escalating territorial disputes with Vietnam and the Philippines over islands in the South China Sea. Beijing claims nearly all of the South China Sea, and says that on Jan. 1 it will start boarding foreign ships that "illegally" enter waters over which it claims sovereignty.

Tokyo, too, is having its politics blown about by the tempest in the East China Sea. The right-wing Liberal Democratic Party chose former prime minister Shinzo Abe – known for his anti-Chinese views – to lead it into a Dec. 16 election, which the party looks set to win. Meanwhile, Tokyo governor Shintaro Ishihara, the outspoken nationalist who instigated the recent crisis by trying to purchase the islands – he warned that Japan risks becoming "the sixth star on China's national flag" if it didn't stand up to Beijing – has resigned to run for national office as leader of a new far-right movement that has unexpectedly moved into second in opinion polls, ahead of Mr. Noda's Democratic Party of Japan. Mr. Ishihara is expected to campaign on a "relaxation" of Japan's pacifist postwar constitution.

Nevertheless, the official line from Japan is that everything is normal.

The Japanese Maritime Self-Defence Force invited The Globe and Mail – the only non-Japanese media organization on the trip – for an overhead look at the situation on the water. The message they wanted to convey was that everything was normal, the situation was under control, even though officers admitted they were couldn't even try to guess what Beijing will do next.

"We're watching the Chinese closely, they're watching us closely. It's a standoff," explained one crewman as he looked out the window of the P-3 plane, scanning for more Chinese boats. A public relations officer cut him off, and asked that the rest of his sentence not be translated. "Everything is just business as usual," the media officer, Lieutenant Commander Koichi Seki, finished on behalf.

The Chinese say business as usual is over. "Though there is still a long way to go, China has effectively fought against the arrogance of Japan, forcing it to accept China's new stance over the Diaoyu Islands," crowed a recent editorial in the Global Times, a Communist Party newspaper. "The world accepts that China is making moves to safeguard its legitimate interests."

Internationally, the waters are muddier now than they were before September when the Japanese government bought three of the five islets from the Kurihara family, which had owned them for the past four decades. Prime Minister Yoshihiko Noda said he hoped to calm relations with China by "nationalizing" the islands and blocking a more provocative bid by the right-wing governor of Tokyo. But the move backfired as Beijing went on the offensive, unleashing its ships and encouraging tens of thousands of Chinese to show their "patriotism" by staging days of sometimes-violent anti-Japanese protests around the country.

The Japanese position remains that there is no territorial dispute to discuss. But that now seems at odds with the edgy situation around the islands.

"They won't say they accept this [that the islands are disputed], but they are just helpless in the face of this fact. Our power is much stronger than theirs, and we are also much closer than they are to the islands," said Xu Guangyu, a retired general in China's People's Liberation Army who now heads a think tank. "Now that our patrols have become regularized, they are actually very busy just trying to match us."

"While asking [the Chinese ships] to leave, we also have to be aware of safety. Their ship is also a national ship so we comprehend each other. It is a sensitive nation-to-nation matter, so we need to make sure the matter will not escalate," said Rear-Adm. Toshiya Yamazaki, deputy commander of the Japan Coast Guard base on Okinawa, which has seen its resources stretched trying to keep up with the daily Chinese maneuvers.

Asked whether he thinks the Chinese side is gaining the upper hand in the showdown, Rear Adm. Yamazaki sounds like a man who wishes he could take a tougher line towards the intruding Chinese ships. "That is a matter for the national government to decide."

Which means the situation will remain in flux for some time.

"In both countries, the leadership transitions probably decrease the willingness to take a more cooperative, or less escalatory, response, and in that sense it's encouraging tougher policies," said Taylor Fravel, an expert on East Asian security at the Massachusetts Institute of Technology.

He said an error at sea could quickly sea one or both sides sending warships towards the islands. "If there was an incident, a collision between government vessels where personnel from one or both sides were injured or killed, there would be demands from both sides for a more forceful response."

How the dispute started

In the background of the Japan-China islands dispute is the United States, which maintains a heavy military presence on nearby Okinawa, much to the resentment of a local population tired of screaming fighter jets and misbehaving troops. The U.S. is bound by treaty to protect Japan in the case of attack, although it's far from clear whether that document applies in the event of a strictly naval clash in disputed waters.

The question of who's right and who's wrong in this showdown depends on interpretation of history. The islands were Chinese until 1895, when they were surrendered to Japan along with Taiwan under the Treaty of Shimonoseki, which ended the First Sino-Japanese War. They've been under Tokyo's rule since then, except for the period of U.S. occupation, although Beijing and Taipei say they should have been returned to Chinese control following the end of the Second World War.

Taiwan also claims the islands, and dispatched a flotilla of fishing boats and fishery patrol vessels to the area in late September, leading to a swirling clash at sea with the Japan Coast Guard that saw each side bombard the other with water cannon.