Stephen M. Walt

Why doesn’t China just buy the Senkaku islands? (updated)

Why doesn’t China just buy the Senkaku islands? (updated)

There’s a fascinating and worrisome confrontation playing out in the East China Sea, over a group of uninhabited islands called the Senkakus (Chinese name: Diaoyu). Here’s where they are, and here’s what they look like.

Short version: Japan seized control of the islands following a war with China in 1895. The United States administered them from 1945 to the early 1970s. Japan regained control in 1972, when ownership was reacquired by a private family. Nobody lives there.

Earlier this year, the right-wing mayor of Tokyo said the city government was going to buy the islands to ensure that they remained in Japanese hands. (Had he gone ahead and done so, they would have become the most distant metropolitan suburb in the history of the world). To forestall this step, the Japanese national government bought the islands instead, a step that has provoked some ugly demonstrations in China and raised the possibility of a military confrontation.

This issue is a tricky problem for the United States, because we’ll be expected to support our Japanese ally if the dispute escalates. The U.S. position on the whole issue isn’t clear, however, and is further complicated by the fact that Taiwan agrees with the PRC and regards the islands (the largest of which is only some 4 square kilometers and is home to moles, birds, and sheep), as part of its territory too.

This whole business got me thinking. In a bygone era, sovereigns used to sell each other territory when it was in their interest to do so, normally when one of them needed cash. Remember the Louisiana Purchase, or the acquisition of Alaska from Russia? If the Japanese government can pay roughly $2 billion to buy the islands from a private family, why can’t China pay the same amount (or whatever the market will bear) to obtain them from Japan? After all, the PRC is pretty flush with cash these days, and Japan could use some extra money (although ~$2 billion isn’t really that much). Still, why not just view this as a simple matter of business?

The main obstacle to this obvious solution is nationalism. China regards the islands as Chinese territory, so why should they pay Japan in order to get something they think is rightfully theirs? Similarly, some Japanese might regard selling the islands as an affront to their own national pride, or something like that, even though nobody in Japan is likely to live there or even get anywhere near the remote little rocks.

Nonetheless, it would be smart move for Tokyo to offer to sell the islands at roughly the same price they just paid. Think of it this way: Suppose you and a wealthy neighbor disagreed over the boundary line between your property, and suppose further that the municipal records where you lived weren’t clear. Both parties think the other’s position is unfair, but you might be willing to forego your claim if your wealthy neighbor offered you enough. And he might be willing to do that even if he believed he was purchasing something he already owned, if doing so would be cheaper than litigation and if he wanted to avoid having a nasty relationship with you in perpetuity. Buying out your claim would be smart move on his part, and you might even take the money and invite him over for a beer to celebrate the deal.

Tokyo should offer to sell for another reason. If China refused, it would look like Beijing was spoiling for a fight, and unwilling to solve the matter in a reasonable way. That outcome would be a victory for Japan, because it is in their interest to be seen as the reasonable party in this dispute. Why? Because if China’s power continues to rise, a key feature of East Asian diplomacy will be how different actors inside and outside the region perceive the intentions of the various players. China will want to portray the United States and its various regional allies as the main source of confrontation or instability, because that will make other states less likely to join with the United States in balancing China. By contrast, the more that Beijing is perceived as bellicose, ambitious, and prone to throwing its weight around, the easier it will be for the United States to maintain its Asian partnerships and the more that other states in East and Southeast Asia will be inclined to cooperate with each other despite their economic ties to China and their various disputes with each other. The spat over the Senkakus provides both Japan and China with an opportunity to show how reasonable they can be. And by doing so, they give the other side a chance to blow it by being recalcitrant or greedy.

By the way, I’m betting that none of these things will happen: Japan won’t offer to sell and if it does, China will refuse to buy. Which is one of the many reasons why I believe security competition in East Asia will continue to increase.

 UPDATE:  A well-informed commenter called me yesterday and said I had missed a key element in this dispute: China doesn’t care about the islands per se; it is more interested in the resources that may exist in their vicinity (oil, gas, fish, etc.) and wants possession in order to extend its "exclusive economic zone."  This is a good point, but it is not a barrier to a financial solution to the dispute.  If there are valuable resources and China wants them, Japan can just raise the price, or agree to sell in exchange for some cash up front and a percentage of future revenues (say, for the next fifty years or so).  In other words, there’s in principle no reason this couldn’t be handled through a process of bargaining and side payments.  But as I said, I still don’t think it will get resolved this way.