BEIJING – If the recent tension between China and Japan over disputed islands in the East China Sea is any indication, relations between the world’s second and third largest economies will not be smooth for some time to come, despite ever-increasing bilateral trade and investment.

That is because both countries’ latest rush to affirm their sovereignty over the islands – called Senkaku in Japanese and Diaoyu in Chinese – reflects a sense of insecurity and a perception that the other side is taking an aggressive stand, which means that the issue is unlikely to be resolved in the foreseeable future.On the Japanese side, there is growing anxiety over China’s increasing economic and military prowess, such that some nationalists would like to "settle” the matter in Japan’s favor as soon as possible. Tokyo Governor Shintaro Ishihara’s recent call for Japan’s government to "purchase” the islands from "private” Japanese owners can be explained in this context.On the Chinese side, the maritime quarrels with Japan – and with Brunei, Malaysia, Vietnam, and the Philippines in the South China Sea – have reignited a national debate about whether China’s foreign policy is too weak in terms of asserting the country’s interests. America’s "pivot” to Asia, viewed by many Chinese as an effort by the United States to reassert itself in Asia by supporting other Asian states in "containing” China’s rise, has fueled a siege mentality among Chinese nationalists. Their response is to call for tough military action in the South China Sea, and to stage symbolic landings on the Diaoyu/Senkaku islands, such as those staged by Hong Kong activists on August 15.Japan arrested the activists, but deported them soon after, thus avoiding a prolonged confrontation with China. The Japanese authorities clearly learned a lesson from their detention of a Chinese fishing boat captain two years ago, when they eventually acceded to Chinese pressure – which included a range of harsh, and escalating, political and economic measures– to release him.Soon after the Hong Kong activists’ protest landing on the disputed islands, Japanese citizens, including local assembly members, staged their own landing there. Moreover, the Japanese government, while rejecting a further appeal from Ishihara to provide land on the isles to the Tokyo municipality, is, however, raising money to purchase some of the islands from their supposedly bankrupt Japanese owner.Such mixed signals have further inflamed nationalist sentiments in China, and anti-Japanese demonstrations have broken out in many Chinese cities, including an attack on the Japanese ambassador’s official vehicle. Both sides urgently need to cool off, especially in order to contain their extremist elements and prevent them from taking over the issue and setting the policy agenda.In the short term, China’s government should discourage further anti-Japanese demonstrations. Well-educated Chinese should understand that destroying Japanese cars (which are made in China) and similar behavior are not rational ways to express an opinion about a territorial dispute with Japan. And China’s government should work with the Hong Kong authorities to prevent another attempt by Chinese activists to land on Senkaku/Diaoyu again in October.For its part, Japan should suspend its plan to buy the islands, an effort that is certain to make matters worse if it goes ahead. The status quo is that the Chinese government has not challenged Japan’s de facto control of the islands, so further action to force China’s hand would be extremely unwise.In the medium term, the two governments should work out a formula for coping with scenarios that now play out regularly. A crisis-management team, composed of representatives of both countries’ foreign ministries, coast guards, and militaries, should not only meet regularly, but should also consult each other in emergency situations, thereby minimizing the risk that matters get out of control.Moreover, such a formula should bar provocative actions by either side, including military exercises, such as those staged recently by China and, jointly, by the US and Japan. It should also contain a standard procedure for managing the aftermath when behavior by citizens of either country forces the two governments into unexpected situations.In the long run, the best outcome is a peaceful resolution to the sovereignty issue, or, barring that, a compromise that satisfies both sides’ core interests. Joint development of the area’s resources, which both countries need, should be returned to the bilateral agenda.China’s former leader Deng Xiaoping famously proposed that, for the sake of better Sino-Japanese relations, the two countries should shelve the Diaoyu/Senkaku dispute for future generations to resolve. That wisdom remains the best advice to date, especially given that the consequences of a worsening bilateral relationship would extend far beyond China and Japan.Wenran Jiang, a former Japan Foundation Fellow, is a professor of political science at the University of Alberta and a senior fellow of the Asia Pacific Foundation of Canada.Copyright: Project Syndicate org