This paper examines the possible escalation of conflict between China and Japan and the implications for Australia and the US.

Executive summary:

• Political competition and a lack of crisis management mechanisms could make it very hard for China and Japan to resist escalatory pressures in the very plausible event of a minor armed clash in the East China Sea.
• Japan’s reluctance to use force may be less extensive than some assume and its connections to US strategy and C4SIR systems increase the prospect of early American participation.
• Command and control vulnerabilities could mean serious pre-emption pressures if Beijing thought a larger conflict was possible. American attacks on the PLA’s conventional war-fighting systems could create perverse incentives for China to use its nuclear weapons early while it was still confident in its physical ability to do so.

Policy recommendations:

• Australian planners should assume that China and Japan may not be able to continue avoiding minor hostilities over their conflicting East China Sea claims.
• Australian planners should also assume that initial hostilities between Japan and China could easily escalate into a much more serious conflict, potentially involving the United States and possibly crossing the nuclear threshold.
• Australian policymakers and decision-makers should encourage their Chinese and Japanese counterparts to treat the Sino-Japanese relationship as an adverse partnership involving common as well as competing interests.