The central aim of this first analytical chapter is to investigate if and how Japan exerted power over the People’s Republic of China (PRC or China) when the two countries negotiated the ‘Agreement between Japan and the People’s Republic of China concerning the Encouragement and Reciprocal Protection of Investment’ (Japan-China Bilateral Investment Treaty, JCBIT). Ancillary purposes include scrutinizing the policy instruments used by Japan, and the country’s policymaking process with regard to issuespecific China policy. This purpose superficially coincides with that of Zhang Dong Dong (1998b).1 Yet, unlike Zhang, it does not imply a market-oriented approach to Japanese effects on China’s FDI regime. Zhang concludes that (further) liberalization of the Chinese market-in particular the adoption of new investment laws-has correlated positively with increased inflows of Japanese FDI into the country (ibid.: 53, 57, 58, 65, 68; cf. Harwit 1996:983), and inversely that de-liberalization has affected such inflows negatively (Zhang D.D. 1998b: 57, 61, 66). Increased FDI, in turn, is found to have sparked further liberalization (ibid.: 61, 63, 64, 72). Causality of this kind allegedly shows that Japan can influence FDI arrangements in China. Although Zhang’s concept of influence could be questioned, his findings will not be re-evaluated here. Instead, Chapter 3 is organized as follows: post-war (WWII) Japanese-Chinese economic interaction is first outlined in terms of trade, official development assistance (ODA) and FDI. Second, there is an analysis of the negotiation rounds that took place prior to 1988. This prelude is succeeded by fully-fledged relational power analysis; bilateral negotiations in 1988 are subjected to the three analytical steps outlined in Chapter 1, namely process-tracing analysis (two sections), interest analysis and intentional analysis, respectively. A sketch of some post-treaty developments follows these sections. Finally, there is a concluding section.