It was the first time a Japanese prime minister made a clear-cut statement on the referendum, Liu said. Given the sensitive situation across the Taiwan Straits, the Japanese Government has realized that it should honor the principles enshrined in the important political documents signed between China and Japan to establish mutual trust, he said.

Taiwan leader Chen Shui-bian's insistence on a "pro-independence" stance despite international opposition is detrimental to Japan's national interests, which call for peace and stability across the straits, he added.

Warming ties

Since Junichiro Koizumi stepped down as prime minister in 2006, Sino-Japanese relations have been in an upward spiral. Fukuda's immediate predecessor, Shinzo Abe, paid an "ice-breaking" visit to China in October 2006 shortly after he took office. Chinese Premier Wen Jiabao visited Japan in April 2007, a trip hailed as "ice-melting" by the Chinese media.

At the end of August, Defense Minister Cao Gangchuan paid an official goodwill visit to Japan, the first for a Chinese defense minister since 1998. In November, the missile destroyer Shenzhen became the first Chinese warship to visit Japan since the founding of the People's Republic of China in 1949. A Japanese delegation led by Foreign Minister Masahiko Komura attended the first China-Japan high-level economic dialogue in Beijing in early December. This dialogue mechanism was agreed upon between Wen and Abe during the former's trip to Japan in April.

Fukuda, who assumed office in September 2007 following Abe's abrupt resignation, attaches great importance to developing strategic and mutually beneficial relations with China, Liu said. Notably, he has promised not to visit the Yasukuni Shrine in sharp contrast to Koizumi. The shrine honors Japan's war dead, including Class A war criminals from World War II, and has long been a source of friction between Japan and its Asian neighbors. Koizumi paid homage to the shrine each year while he was in office from 2001 to 2006, plunging China-Japan relations to a low point.

Fukuda also no longer uses controversial concepts such as "value-oriented diplomacy," "four-nation alliance," which groups Japan, the United States, India and Australia, and "arc of freedom and prosperity." Instead he has taken the initiative to develop cooperative relations with China, Liu said. In his speech at Peking University on December 28, Fukada called on the two countries become "creative partners" in building Asia and the world's future.

China and Japan signed the Treaty of Peace and Friendship in 1978 when Fukada's late father, Takeo Fukuda, was Japan's prime minister. Influenced by his father, Fukuda sees great value in promoting Japan's relations with Asian countries, Liu said. He has already vowed to make Japan-U.S. alliance and its Asian diplomacy "resonate with each other."

Although Japan-U.S. relations are still the axis of Japan's diplomacy today, Japan's economic ties with China keep expanding, Liu said. China has surpassed the United States to become Japan's biggest trading partner, according to Japanese government statistics. In terms of business and trade, China's importance to Japan, a country that relies heavily on overseas markets, is self-evident, he added.

Opportunities and challenges

At present, China and Japan both face new opportunities and fresh challenges to upgrade their relations, said Jin Xide, Deputy Director of the Institute of Japanese Studies under the Chinese Academy of Social Sciences. The key for them to forge strategic reconciliation and cooperation lies not only in the appropriate handling of the structural conflicts of their practical interests, but also in the elimination of the two countries' emotional and ideological estrangement. Whether China can accept Japan as a "normal country" and whether Japan will drop its policy of "containing China in collaboration with the United States" will continue to be major concerns for both countries in the new century, he said.

Over the past dozen years, Japanese political elites have been unable to adapt themselves to China's development and have responded excessively to and even categorically rejected the trend, Jin said. Today, in light of the continued growth of China's international influence, they are putting forward new solutions. While some have questioned Fukuda's abandonment of "value-oriented diplomacy," many insightful people suggest that China and Japan should "co-chair" East Asia. The policy considerations of Japanese politicians show that they are switching to a more objective and somber view of China and increasingly accepting the reality of China's rise, Jin said.

Huo Jiangang, a Japanese affairs expert at the China Institutes of Contemporary International Relations, identified three major challenges facing China-Japan relations. First, Japanese right-wing conservatives disapprove of Fukuda's new foreign policy and are trying to prevent him from going too far, he said. Whether Fukuda will remain long in office is open to question. He is haunted by many domestic problems such as the opposition's challenge of the new antiterrorism bill and the ongoing pension scandal in which the government lost track of the pension records of millions of beneficiaries. Since the ruling Liberal Democratic Party has lost control of the parliament's upper house, Fukuda is considered a weak prime minister hardly able to introduce any significant political initiatives.

Second, a general election for the more powerful lower house of the Japanese Diet is likely to be called in 2008. Whether Fukuda's Liberal Democratic Party can win the election is difficult to predict, Huo said.

Third, sensitive diplomatic questions, including Taiwan and the East China Sea, will also pose challenges to China-Japan relations, he added.

Despite these uncertainties, Liu believes 2008 will be a "big year" for Sino-Japanese relations. It will mark the 30th anniversary of the signing of the China-Japan Treaty of Peace and Friendship. It also will see the two countries further promote their youth exchanges as they observe the China-Japan Friendly Exchange Year of the Youth.

The upcoming Beijing Olympics is also expected to have a positive effect on the two countries' exchanges as well. And Hu is scheduled to visit Japan in the spring when the "cherry blossoms are in full bloom." With all these events, 2008 will be a year of opportunity for China and Japan to strengthen their bilateral relations, Liu said.