Recent developments in the Asia-Pacific region have cast a shadow over the first round of China-Japan-ROK Free Trade Agreement talks, to be held in Seoul from March 26 to 28.

Sino-Japanese relations show no signs of improvement because of the Diaoyu Islands dispute. The two countries' mutual suspicion has been influencing many of their decisions. There seems to be a "strategic competition" between China and Japan. On the surface, the dispute over the Diaoyu Islands may look like a conflict for the sake of "face". But in reality, it reflects the structural contradictions in Sino-Japanese relations. Japan cannot accept a rising and more "assertive" China, whereas China find suspicious Japan's intention to transform itself into a "normal" country.

If China is strengthening its military, Japan is beefing up its defense forces, and both have issued hard-hitting statements against each other. Japan and China are caught in a strategic race of resolve and patience, and the resultant erosion in mutual trust between Chinese and Japanese peoples and rising nationalist feelings are making it difficult for the two sides to reach a compromise.