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A South Korean police officer stands guard on Dokdo/Takeshima.YONHAP/Reuters

Will war break out in the seas of East Asia?

After Chinese and Japanese nationalists staged competing occupations of the barren land masses that China refers to as the Diaoyu Islands and Japan calls the Senkaku Islands, demonstrators in the southwestern Chinese city of Chengdu chanted, "We must kill all Japanese."

Likewise, a standoff between Chinese and Philippine vessels in the Scarborough Shoal in the South China Sea led to protests in Manila. And a long-planned step forward in co-operation between South Korea and Japan was torpedoed when the South Korean Prime Minister visited the barren island that Seoul calls Dokdo, Tokyo calls Takeshima, and Washington calls the Liancourt Rocks.

One should not be too alarmist. The U.S. has declared that the Senkaku Islands (administered by the Okinawa Prefecture when it was returned to Japan in 1972) are covered by the U.S.-Japan security treaty. Meantime, the standoff over the Scarborough Shoal has calmed down and, while Japan recalled its ambassador from Seoul over Dokdo, it's unlikely the two countries will come to blows.

But it's worth recalling that China used lethal force to expel Vietnamese from the Paracel Islands in 1974 and 1988. And China prevailed on the Cambodian hosts of this year's ASEAN summit to block a final communiqué that would have called for a code of conduct in the South China Sea – the first time in the 10-member association's four-decade history that it failed to issue a communiqué.

The revival of extreme nationalism in East Asia is both worrisome and understandable. In Europe, while Greeks may grumble about the terms of German backing for emergency financing, the period since the Second World War has seen enormous progress in knitting countries together. Nothing similar has happened in Asia, and issues dating back to the 1930s and 1940s remain raw, a problem exacerbated by biased textbooks and government policies.

The Chinese Communist Party is not very communist any more. Instead, it bases its legitimacy on rapid economic growth and ethnic Han nationalism. Memories of the Sino-Japanese War of 1894-1895 and Japanese aggression in the 1930s are politically useful and fit within a larger theme of Chinese victimization by imperialist forces.

Some U.S. defence analysts view China's maritime strategy as clearly aggressive. They point to increasing defence expenditures and the development of missile and submarine technology designed to cordon off the seas extending from China's coast to "the first island chain" of Taiwan and Japan.

Others, however, see a Chinese strategy that's confused and contradictory. They point to the negative results of China's more assertive policies since the economic crisis of 2008. Indeed, its policies have damaged relations with nearly all its neighbours.

Consider the 2010 Senkaku incident, when, after Japan arrested the crew of a Chinese trawler that had rammed a Japanese coast guard vessel, China escalated its economic reprisals. The result, as one Japanese analyst put it, was that "China scored an own goal," reversing what had been a favorable trend in bilateral relations. More generally, while China spends billions of renminbi in efforts to increase its soft power in Asia, its behaviour in the South China Sea contradicts its own message.

I have asked Chinese friends and officials why China follows such a counterproductive strategy. The formal answer is that China inherited historical territorial claims, including a map from the Nationalist period that sketches a "nine-dotted line" encompassing virtually the entire South China Sea. Some officials have even referred to this sea as a sovereign "core interest" like Taiwan or Tibet.

But China's leaders have never been clear about the exact location of the "nine-dotted line," or about whether their claims refer only to certain land features, or also to more extensive continental shelves and seas. When asked why they don't clarify their claims, my Chinese interlocutors sometimes say that to do so would require political compromises that would provoke domestic nationalists. And sometimes they say they don't want to give away a bargaining chip prematurely.

In 2002, China and ASEAN agreed on a legally non-binding code of conduct for managing such disputes, but China believes it will gain more in bilateral rather than multilateral negotiations with small countries. That belief was behind China's pressure on Cambodia to block ASEAN's final communiqué this summer.

But this is a mistaken strategy. As a large power, China will have great weight in any circumstance, and it can reduce its self-inflicted damage by agreeing to a code of conduct.

As for the Senkaku/Diaoyu islands, the best proposal comes from The Economist. China should refrain from sending official vessels into Japanese waters, and use a hotline with Japan to manage crises generated by nationalist "cowboys." The two countries also should revive a 2008 framework for joint development of disputed gas fields in the East China Sea, and Tokyo should purchase the barren islands from their private owner and declare them an international maritime protected area.

It's time for all countries in East Asia to remember Winston Churchill's famous advice: "To jaw-jaw is always better than to war-war."

Joseph Nye is a professor at Harvard and the author of The Future of Power.

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