The islands known as Diaoyu in Chinese, and Senkaku in Japanese, are the epicenter of rising tensions between the two Asian nations. The escalation over the last few years suggests that a military confrontation is not impossible and raises the question of what would be the cost of a war between China and Japan for the U.S.
If the conflict was to lead to war, the United States would have to choose between its long time ally, Japan, and its largest economic partner and lender, China.
However, its not much of a choice as the United States and Japan are bound together through a mutual defense treaty, which would require the United States to enter into war with China if Japan did so. The U.S. Senate made the choice clear in November 2012 when it recognized Japan's claim over the disputed islands.
Even if China and Japan avoid war, the continuation of the conflict between the region's two major economies would affect the global economy. It has already had a significant impact on the entire Asian-Pacific region, which represents 55 percent of the global GDP and 45 percent of trade. Share stat: Tweet