According to experts, the answer is economics, which strongly connect all the main actors in the Asia-Pacific region. China needs Japanese investment. Japan needs the Chinese market. So far this simple equation has been enough to overcome political problems. Until the Asian financial crisis struck, that is.
China today needs even more foreign investment, which has become a rare product in Asia.
Prime Minister Zhu Rongji is skilled at shock therapy, and has no plans to put economic reform on hold. The risk is a possible social explosion in China if rising unemployment is not quickly solved. The other Damocles Sword is the devaluation of China's currency, the yuan. Beijing's promise to not devalue its currency has won China respect abroad. Yet the high cost to Chinese exports, combined with a political desire, could mean China may use this weapon to force Japan into a more cooperative position Japan has been seriously affected by the Asian crisis and a devaluation of the yuan would probably ruin the Japanese economy as the first wave of the financial crisis destroyed South Korea, the world's 11th largest economy.