In 2005 China's gunboat diplomacy in the East China Sea (which may contain 100 billion barrels of oil) contributed to the re-election of Prime Minister Junichiro Koizumi, laying the foundation for a more aggressive foreign policy in Japan.
Instead, Japan and China could co-operate on hydrocarbon exploration. Japan can also show its good intentions by offering China the benefit of its expertise in energy efficiency (Japanese industry uses one-ninth the amount of oil that China does to generate the same profit).
And if China is to build strong ties with India and stop it from falling into the US strategic camp, it needs to heal two sources of conflict: its treatment of Tibet and its failure to demarcate the 4,057km Indo-Chinese border. Also, China's territorial ambitions towards Taiwan, which would give it control of the area's shipping lanes, threaten regional stability.
Regional co-operation won't happen unless there is a security understanding between the three nations and, in particular, increased transparency on military expenditure. The latter is crucial in the light of China's military modernisation plans and its decision to build a stronger navy.
Forestalling strategic conflict in Asia
Far Eastern Economic Review, November 2006, Vol 169 No 9