Japan has been paying close attention to the rise of the People’s Republic of China (PRC) as a world power. Tokyo wants to make sure that it has a smooth relationship with its close neighbour Beijing. As the second largest economy in the world, Japan seeks to benefit from China’s huge market while minimising the mainland’s ‘competitive advantage’. As the most important ally of the United States in the Asia-Pacific region, Japan has to tread a delicate line between Washington and Beijing, as the tension between the two has been heightened since President George W.Bush came to power in early 2001. This chapter examines Japanese perceptions of a potential China threat. First, it considers the issue of threat perception in Japan’s foreign policy in general. Second, it discusses threat perceptions in Sino-Japanese relations. Third, it examines in detail the Japanese debate on a potential China threat. Finally, it considers changes in Japan’s China policy as the outcome of this debate.