The latest IISS Strategic Comment ended with this;
Both sides are reluctant to contemplate anything that might amount to a loss of sovereignty, and both have a keen interest in the possible resources underneath the sea. The continued use of maritime paramilitaries for diplomatic means rather than more muscular military assets suggests that conflict remains a distant possibility. Nonetheless, periodic paroxysms of protest and friction are likely to continue to characterise the Sino-Japanese relationship, with the islands acting as a trigger.
Link:http://www.iiss.org/publications/str...nese-tensions/