Related: South China Sea

The dispute between China and Japan over the resources in the East China Sea revolves around two issues: demarcating the sea boundary between each country and sovereignty over the Daioyu/Senkaku Islands. Taiwan's claim parallels China’s, particularly with regard to the Daioyu/Senkaku Islands, but Taiwan has not actively pursued the resources. Bureau chief-level negotiations between China and Japan to resolve the territorial claims began in late 2004; five of the currently eleven rounds of talks were held in 2007.

The UN Convention on the Law of the Sea (UNCLOS) defines both an Exclusive Economic Zone (EEZ) and a continental shelf. Japan defines its boundary as the UNCLOS EEZ extending westward from its southern Kyusyu island and Ryuku islands. China defines its boundary using the UNCLOS continental shelf, but extends its territorial claims using the concept of a natural extension of its continental shelf. The overlapping claims amount to nearly 81,000 square miles, an area slightly less than the state of Kansas. Japan has proposed a median line (a line drawn equidistant between both countries EEZs) as a means to resolve the issue, but this has not proven acceptable to China.

Japan occupies the Daioyu/Senkaku Islands (Chinese name/Japanese name; DSI), but both China and Taiwan claim them. The complexity of sovereignty over DSI begins in the closing decade of the 19th Century. Until the Sino-Japanese War, Taiwan, as part of China, was in charge of the management of the Daioyu islands. At the conclusion of the Sino-Japanese War in 1895, Japan assumed control of Taiwan and DSI. Upon Japan’s defeat in WWII, Taiwan was returned to China, but no specific mention was made of DSI in any subsequent document. The conclusion of the Chinese Civil War in 1949 saw Taiwan’s Kuomintang proclaim themselves the rightful rulers of Taiwan and China (Republic of China; ROC). Mainland China’s Communists proclaimed Taiwan part of China (People’s Republic of China; PRC).

Little attention was given towards DSI sovereignty until 1969 when a UN report indicated possible large hydrocarbon deposits in the waters around DSI. In June 1971, the United States and Japan signed the Okinawa Reversion Treaty which included DSI as part of the Okinawa islands to be returned to Japanese control; the treaty was quickly challenged by both the PRC and the ROC. In September 1970, a Taiwanese gunboat planted a flag on DSI, generating strong protests from both China and Japan. In 1978, Japanese civilians erected a lighthouse on the largest island in DSI. Due to typhoon activity in the area, repair and reconstruction of the lighthouse has since been permitted by the Japanese government. To date, the sovereignty of the islands remains contested.

The first bilateral talks between China and Japan over East China Sea issues began in October of 2004 (timeline of talks); Taiwan has not participated in any discussions. Over the course of three years, China and Japan have exchanged ideas to resolve the East China Sea dispute, but to date, no accord has been reached. Japan has consistently requested seismic data from China on its X/O fields and requested that China desist production until an agreement can be reached. China has consistently rejected this claim, insisting that the X/O Trough is within its territorial sovereignty.

Both China and Japan have offered joint development of the resources as a means of moving forward with development, but the areas in which joint development has been offered have not been agreed to. China has offered joint development of the gas fields north of DSI, sidestepping the sovereignty issue. Japan has offered joint development of the Chunxiao/Shirakaba gas field, sidestepping the sea boundary dispute. To date, neither side has accepted the other’s offer.