Salient to Investors:
It’s unlikely the leaders will allow any escalation into open conflict.
Richard Samuels at MIT said the conflict is due to domestic political considerations as the whole region is roiling amid uncertainty over leadership. Samuels says there is always the danger of miscalculation which is why Japan patrols with the Coast Guard and not naval vessels.
Feng Wei at Fudan University said Noda is having a difficult time at home and fanning the Diaoyu islands issue is the only card he can play, while anti-Japanese sentiment serves as the glue and ideology that can bring the Chinese together.
Chen Yuluic adviser to the People’s Bank of China, told reporters in Beijing that the island dispute threatens Tokyo’s future as an offshore yuan center.
Brad Glosserman at Pacific Forum CSIS said both sides need to take their egos and nationalist instincts offline, but neither country can afford to back down because of both their extreme nationalistic pressures.
Kunihiko Miyake at Ritsumeikan University sees a need to reset ties which requires a change of players.