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For the last ten years, Japan and China have tried to work together toward a “mutually beneficial relationship” based on common strategic interests but have failed to accomplish this for a number of reasons. The two historical neighbors are separated by no more than a strip of water and have come a long way to be the third and the second largest economies in the world, respectively. Along with political economic aspects, relations between the two countries are of critical importance in regional and global security contexts. With that in mind, the following paper will: (1) overview trends in Sino–Japanese relations over the last ten years; (2) look at trends in China's military capabilities and activities and the implications; and (3) discuss key issues and courses of action for Japan. [ABSTRACT FROM PUBLISHER]