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Published in The Straits Times. Copyright © 2003. All Rights reserved.

MONTEREY (California) - China and Japan this week marked the 25th anniversary of the Sino-Japanese Treaty of Peace and Friendship, which was signed on Aug 12, 1978, in Beijing. That treaty marked the end of hostilities between the two countries as they pledged to build neighbourly relations.

The Asian giants have to develop a mature relationship which can anchor peace and stability in the Asia Pacific. Behind the celebratory festivities lingers the shadow of the past, and mutual suspicion and distrust.

Since the signing of the treaty, China and Japan have developed extensive ties in trade, investment and cultural exchanges.

Two-way trade passed the US$100 billion (S$176 billion) mark last year, making Japan China's top trade partner. Japanese investment in China is more than US$25 billion, with carmakers and electronic giants relocating manufacturing facilities to China.

Official Japanese development assistance, which totals US$15 billion, has contributed significantly to Chinese economic development in the last three decades. More than 200 Chinese and Japanese cities are paired as sister cities and two-way people-to-people exchanges exceed three million each year.

However, despite growing economic interdependence, the political relationship between the two countries is not yet a mature one built on a solid foundation.

Three issues, in particular, dog bilateral ties: historical baggage, threat perceptions and territorial disputes. Developments in these areas take place at a time when both countries are seeing a generational change in leadership, against a background of changing domestic politics and external environments.

The countries remain haunted by the past. Japan's refusal to review school history textbooks continues to rankle with China. Controversial annual visits to the Yakusuni Shrine by Japanese politicians, including Prime Minister Junichiro Koizumi and Cabinet members, further anger and alienate Beijing.

The memory of Japan's wartime atrocities is kept fresh by incidents such as the recent one involving dozens of Chinese workers exposed to leakage from abandoned chemical weapons left by the Japanese army in Qiqihar, Heilongjiang province. Yet, while Beijing urges Tokyo to face up to its past, a new generation of Japanese politicians, and citizens, is becoming increasingly impatient with the politics of apologies.

Beijing and Tokyo also harbour suspicions about each other's intentions. Japan is wary of China's growing military and economic power, especially its increasing defence budgets and nuclear and strategic ballistic missile modernisation. The recently released United States Department of Defence annual report on China's military power suggests some Chinese missiles are targeted at US forces in Okinawa.

China, on the other hand, is highly suspicious of Japan's place in the future security architecture of East Asia, and its pursuit of 'normal country' status. Beijing has closely monitored the expanded role of the Japanese Self-Defence Force since the Sept 11 terrorist attacks, including the dispatch of its personnel overseas beyond United Nations-sponsored peacekeeping operations.

Chinese commentators suggest Tokyo is using this and the North Korean nuclear crisis as pretexts not only to become a 'normal' country, but also to embark on a path of re-militarisation.

Further tension is created by the territorial dispute over the Senkaku (Diaoyu) Islands. The eight uninhabited islands are claimed by China, Japan and Taiwan, and have been the focus of nationalist protests by right-wing Japanese groups.

To develop a mature, stable relationship, China and Japan not only need to sustain and deepen dialogues on security to hedge against potential misunderstandings arising from divergent national interests, objectives and security policies, but also, more importantly, take specific steps to consolidate existing arrangements and create conditions for moving forward.

They have closely consulted each other over the North Korean nuclear crisis. The development of multilateral regional security architecture could also mitigate mutual suspicions.

Sino-Japanese relations need constant nurturing and should be high on the policy agendas in both countries. In this context, Beijing and Tokyo need to do a much better job at fostering mutual understanding between the younger generations of both countries.

Chinese and Japanese statesmen such as Zhou Enlai, Liao Chengzhi, Kakuei Tanaka, Masayoshi Ohira and Takeo Fukuda expended tremendous efforts at building bridges after China and Japan established diplomatic relations. In the 1980s, Chinese and Japanese leaders Hu Yaobang and Yasuhiro Nakasone energetically promoted greater Chinese-Japanese youth exchanges.

The two countries' media bear special responsibility in fostering a stable and mature bilateral relationship. More needs to be said and publicised about efforts to promote Sino-Japanese relations at both governmental and non-governmental levels. Negative reporting could only feed the frenzy of nationalist and extremist elements and would harm long-term bilateral ties.

These are no easy tasks and the challenges are enormous. But China and Japan cannot afford not to try because of the high stakes for them and the region.

The 1970s and 1980s are said to be the golden age of Sino-Japanese relations. The 25th anniversary of the Sino-Japanese Treaty of Peace and Friendship is the right time to begin charting a new course.