This chapter examines the two key controversies in Sino-Japanese relations, the Senkaku/Diaoyu dispute and the "history issue". While the controversies have yet to spill over into military conflict, given the antipathy they create between the two states, it may be worth examining what would happen should there be the scenario. The chapter examines how the Chinese and Japanese have sought to enhance their military capabilities with each other in mind. It explores how Japan has attempted to cope with the additional factor of China's growing power in the region, and how the continuing tensions between the two states could develop in the future. Japan's relations with the People's Republic of China are possibly some of the most volatile of Japan's bilateral relations in the Asia-Pacific. On the one hand, China is of immense importance to Japan. On the other hand, argues that the Chinese economy depends heavily on Japanese parts for its exports.