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This article presents the importance of political factors in the development of China-Japan economic relations over the last four decades. The China-US reconciliation and the rise of the pro-China Japanese Prime Minister Tanaka Kakuei (1972–1974) led to the normalization of China-Japan relations in 1972. The bilateral political rapport was further consolidated in the face of the common threat in the Soviet Union. With the strengthening political relations, the bilateral economic exchanges were gradually developed. Nonetheless, following the collapse of the Soviet Union, mounting Sino-US tension, China's growing assertiveness, and rising nationalism in both China and Japan, the Sino-Japanese bilateral political relations have been deteriorating. The escalating political tensions have impacted bilateral economic relations, including declining Japanese investment in China, weakening bilateral trade, and decreasing Japanese visitors to China. Despite improving bilateral political relations in recent years, it is uncertain how long these friendly gestures by the leaders of the two countries may last given several unsettled territorial and historical issues. The growing tension between the United States and China further adds uncertainty to China-Japan relations in the future. Without strong political relations, weakening economic ties cannot be easily restored. [ABSTRACT FROM AUTHOR]