The central aim of this second analytical chapter is to investigate if and how Japan exerted power over the People’s Republic of China (PRC or China) in response to the latter’s ‘Law on the Territorial Sea and Contiguous Zones’ (Territorial Waters Law, TWL), promulgated in February 1992. Ancillary aims again include scrutinizing the policy instruments used by Japan and the country’s policy-making process with regard to issue-specific China policy. The first section of the chapter provides an overall background to the dispute, both in terms of empirical data and statecraft.1 It is immediately succeeded by relational power analysis of Japan’s reaction to the TWL from late February 1992 onwards. Japanese-Chinese interaction is, in other words, subjected to the three analytical steps outlined in Chapter 1, namely process-tracing, interest and intentional modes of analysis. Next, there is a section attempting to understand subsequent events in light of earlier findings, and finally a conclusion is drawn.