"The U.S. doesn’t take a position on the sovereignty of the islands, known as Diaoyu in Chinese and Senkaku in Japanese, Campbell said. His comments echoed those of Secretary of State Hillary Clinton, who said in 2010 that the islands fall under “mutual treaty obligations” with the Japan government.
Japan’s purchase last week of the islands triggered protests and attacks on Japanese businesses in China, straining ties between Asia’s two biggest economies. In a meeting with U.S. Defense Secretary Leon Panetta this week, Chinese Defense Minister Liang Guanglie said his government reserves the right to take further action in the worst diplomatic crisis between the two countries since 2005.
“We have stated very clearly that we want this issue to be resolved peacefully through dialogue between Japan and China,” Campbell said. The U.S. is concerned “by recent demonstrations, and frankly the potential for the partnership between Japan and China to fray substantially in this environment,” he said."
I see this as a big game of chicken. The Chinese are using Japan's current weakness and the U.S. distractions of the ME flare-up and election season to press their advantage and try to take the islands back without a fight. It might work. Both Japan and the U.S. are stretched way too thin to get into another shooting war with their biggest creditor. In additional to all the nightmares associated with a new war, it first would mean rapid destruction of what's left of all three countries' economies, and nobody has the stomach for that right now.
Let's see who veers off first... – Wes