The Senkaku/Diaoyu islands were formally claimed by Japan in 1895 and have been privately owned by a series of Japanese citizens for most of the past 120 years. Aside from a brief period after World War II when the United States controlled the territory, Japan has exercised effective control over the islands since 1895.
China began to reassert claims over the Senkaku/Diaoyu islands in the 1970s, citing historic rights to the area. Tensions resurfaced in September 2012 when Japan purchased three of the disputed islands from a private owner. The economically significant islands, which are northeast of Taiwan, have potential oil and natural gas reserves, are near prominent shipping routes, and are surrounded by rich fishing areas.
Each country claims to have economic rights in an exclusive economic zone (EEZ) of two hundred nautical miles from its coast, but that space overlaps because the sea separating China and Japan only spans three hundred and sixty nautical miles. After China discovered natural gas near the overlapping EEZ-claimed area in 1995, Japan objected to any drilling in the area due to the fact that the gas fields could extend into the disputed zone.
In April 2014, President Barack Obama became the first U.S. president to explicitly state that the disputed islands are covered by the U.S.-Japan Security Treaty, but the United States does not take a formal position on their ultimate sovereignty. An accidental military incident or political miscalculation by China or Japan could embroil the United States in armed hostilities with China.
Discussions between Japan and China to develop a crisis management mechanism tool began in 2012. Talks stalled when tensions peaked in 2013 after China declared the establishment of an air defense identification zone, airspace over land in which the identification, location, and control of civil aircraft is performed in the interest of national security. After Japan and China signed a four-point consensus document laying out their differences concerning the disputed islands, bilateral discussions resumed in early 2015, aiming to implement the maritime and aerial communication mechanism. After nine rounds of high-level consultations, the mechanism was launched in June 2018.
Rising nationalist sentiments and growing political mistrust heighten the potential for conflict and hinder the capacity for peaceful resolution of the dispute. Though Chinese and Japanese leaders have refrained from forcibly establishing control over the Senkaku/Diaoyu Islands, unauthorized action by local commanders could result in the unintended escalation of hostilities. Through treaty commitments with Japan, a military confrontation could involve the United States. To preserve relations with China and continue cooperation on various issues, the United States has an interest in de-escalating tensions.
Tensions between China and Japan over the contested Senkaku/Diaoyu islands continue to increase as both countries improve their military capabilities, particularly their radar and missile systems, in the region. To avoid accidental clashes at air and sea, China and Japan announced a new crisis communication hotline in June 2018. However, although Japan's Ministry of Defense reported that the number of times Japan's military had to scramble jets in response to Chinese air incursions went down 41 percent in 2017, that number increased in 2018 and is on trend to continue increasing in 2019 [PDF]. Recently, Japan has built new military bases on nearby islands, allegedly to monitor the Miyako and Tokara Straits and prevent China from further developing its military capabilities in the region.