After weeks of escalating tensions, China and Japan have finally decided to bury their hatchet, at least for now. Chinese President, Hu Jintao and Japanese Prime Minister, Junichiro Koizumi met on the sidelines of the Afro-Asian summit held to commemorate the 50th anniversary of the Bandung Conference of 1955 and decided to look beyond their disagreements and focus on the future. This was preceded by a public apology, the most public in a decade, from the Japanese Prime Minister over Japan's wartime aggression. Though the tensions have somewhat eased, critical problems in Sino-Japanese relations remain.

The ostensible reason for the recent Chinese public outcry was the approval of history textbooks by Japan's education ministry that are said to gloss over Japan's militarism in Asia during the first half of the last century. It is argued that about 200, 000 to 300, 000 Chinese were killed during the Japanese occupation of Nanjing that began in 1937. The new Japanese textbooks refer to it as the "Nanjing incident." China has asked Japan to accept responsibility for the unrest in Chinese cities because it continues to rewrite the history of its World War II era occupation of China. Unrest erupted in various Chinese cities including Beijing, Shanghai, Chengdu, and Guangzhou even as the police had been reluctant to maintain order. Japan, meanwhile, asked for an apology of its own from China for violent attacks against Japanese government offices and businesses in China. Japan has also dismissed Chinese complaints about the Japanese Prime Minister's repeated visits to Yasukuni Shrine which includes the 14 major war criminals among the 2.5 million Japanese war dead honored there. It did not help when Tokyo's High Court rejected an appeal for compensation by the Chinese survivors of biological-warfare experiments conducted by Japan during the Second World War.

But it would be a mistake to view the present Sino-Japanese tension merely through the prism of history; it is also about the future of Asian balance of power. Both Japan and China are competing for pre-eminence in the Asian political and strategic landscape, which is producing its inevitable tensions. The recent spat over Japan's historical behavior is just one manifestation of this dynamic.

The two economic giants are also competing for vital energy reserves. A dispute has emerged over exploratory oil drilling in East China Sea. Japan has announced its intention to permit private companies to start drilling in a contested area between Japan and China, east of the halfway line between the Japanese island of Okinawa and the eastern shore of China. The Japanese government has maintained that it has sovereignty over all waters east of this midway line between Okinawa and eastern China. But China has strongly disputed this interpretation and argued that the Asian continental shelf must be taken into account. Japan, on its part, has also claimed that China's offshore platform drilling could be drawing oil away from an undersea deposit that extends into areas claimed by Japan.

What is fueling these Sino-Japanese tensions is a burgeoning sense of strategic rivalry as China's power expands across Asia, and Japan redefines its regional military role in close cooperation with the United States. Japan has made it clear that it considers China to be a potential military threat that would have to be faced and countered in the coming years. This was followed by Japan's announcement that a peaceful resolution of the Taiwan issue is a strategic objective that it shares with the United States signaling to China that it could help America defend Taiwan in the event of a war.

China has hit back by announcing its strong opposition to Japan's bid to become a permanent member of the United Nations Security Council on the grounds that Japan has failed to display sufficient contrition for its wartime atrocities. But the real reason might be a reluctance on the part of China to view Japan as a global power on par with itself. After all, Chinese textbooks are also selective in their portrayal of Chinese history and to argue that the quality of a nation's textbooks should determine whether a state qualifies for Security Council membership is weird, if not wholly dubious.

Even after Sino-Japanese rapprochement in Jakarta, the two sides continue to be wary of each other. China remains skeptical of the sincerity of Japan's apology and has warned it not to meddle in its internal affairs by supporting Taiwan. Japan, on the other hand, has insisted that its apology at the Afro-Asian summit was not related to the events in China, thereby trying to dispel the impression that it had yielded to China. The power politics at play in these events points to the strategic flux in Asia. Not surprisingly, major powers are trying to redefine their strategic options vis-à-vis each other. How this resolves itself in future will determine whether Asia's future will be different from Europe's past, or whether history repeats itself in a different location.