The South Korea-Japan acrimony over history and territory in March proved a prelude to the China-Japan clash over similar issues in April. That despite close economic ties, old disputes keep cropping up with new overtones such as energy rights or global ambitions is instructive not only of the nature of external relations between the countries involved but also of the internal dynamics within the countries. The recent Sino-Japanese spat offers several insights from the latter perspective.

After weeks of protests and violence against Japanese establishments in China, and actually asking China for compensation, Japanese Prime Minister Junichiro Koizumi chose the Jakarta summit marking the 50th anniversary of the Bandung Conference to express his nation's "feelings of deep remorse and heartfelt apology" placing China and the Koreas on par with the rest of Asia. The same day in Japan, however, some 160 members or representatives of members of the Japanese parliament - over one-fifth the strength of the Diet - including a minister of the Koizumi cabinet, visited the Yasukuni Shrine. If this is the Koizumi strategy to re-energise Japan, it is fraught with danger.

Japan's shrinking population, hostility towards immigration, and growing Chinese economic clout are major challenges that call for a radical change of Japanese attitude. Instead, positions on issues like the status of the National Flag, compulsory singing of the National Anthem, and revisions to the Constitution have become increasingly hard-line. Moderates remain too weak to fight a conservatism that runs deep in Japanese society. Thus, it remains easier for Japanese leaders to play up threats from China and North Korea, play the Taiwan card than attempt real changes.

The anti-Japanese protests in China also raise several questions about the latter's domestic scene. Three of these at least, are not new and are frequently cited. One, China is no less engaged in the distortion of history in textbooks as Japan, as incidents of Japanese and other colonial aggressions are played up and a sort of victim's mentality promoted. Two, nationalism is being used by the Communist Party as a prop to its own legitimacy. Three, protests in China are largely government-organized.

But also, four, the central government had a hard time subsequently putting a lid on the protests. One implication is historical - where the protests have been against Japan, as for example, the 4 May  Movement of 1919, these could develop into larger protests encompassing domestic grievances. Another implication is of more recent vintage. Chinese citizens seem to be developing newer vehicles of expression using modern technologies. The government also appears equally adept at employing this technology for its purposes - police used SMS to warn protestors to tone down or end the protests, for example. The question remains, however, just how long can the authorities remain on top?

Five, as in the case of Taiwan, one of Beijing's preferred tactics employed against adversaries is to court popular opinion while resolutely opposing their government's actions. With respect to Japan, China does not have to look far. Local party elites have built up alliances with Japanese investors and enterprises that operate within their domains. For these elites whose future prospects depend on maintaining stability and keeping the FDI flowing, there is every incentive to quell protests as soon as possible. The Washington Post posited this as a reason for the failure of a large strike at a Japanese plant in Shenzhen. An oligarchy is thus building up in China that may be a cause of further upheaval in both countries. History might thus become less important a direct cause of future friction between China and Japan as economics.

Finally, the protests in China have also been interpreted in terms of factional struggles and Beijing versus Shanghai regional power plays. The protests in Shanghai - the first of similar scale since the 1989 protests - prompted the central government-run Liberation Daily of Shanghai to publish an editorial on 25 April, which claimed "a conspiracy behind the scenes." If a threat to Party authority were not the only reason, perhaps, the Chinese government also woke up to incongruity of targeting the goose that lays the golden eggs. But such accusations seem to indicate that Shanghai elites have reached a level of independence or of dissatisfaction, such that they seemed willing to take a few hits economically in order to make political points.

The anti-Japanese protests set a benchmark for the future. Even as rivalry between the two countries grows, domestic imperatives driven by economic motives are the real determinants of whether this rivalry will have a negative fall-out. There is potential for closer, positive economic linkages but there is also a real possibility that storms in political ties and economic relations can be used by a myopic leadership on either side to push each other further away.