The Senkaku/Diaoyu dispute and Sino-Japanese political-economic relations: cold politics and hot economics?

Abstract Can economic interdependence reduce conflicts among states in East Asia? The so-called ‘cold politics and hot economics’ has become a defining feature of Sino-Japanese political-economic relations. This puzzling pattern of interaction is clearly illustrated in the sovereignty dispute over the Senkaku/Diaoyu Islands. The island dispute has unfolded in five rounds of distinct clashes thus far. From one perspective, the competitive elements in the island dispute make it difficult for both Japan and China to give way to the other side on the territorial and maritime issues. At the same time, the two countries have successfully managed to contain their respective territorial and maritime claims thus far. Drawing on the liberal peace theory, this article systematically demonstrates that economic interdependence has repeatedly fostered the de-escalation of Sino-Japanese conflict over territorial and maritime rights.