But both sides are all too aware that serious problems remain. The squabble over the gas fields did not stem directly from a scramble for new energy sources. Even now, Japanese experts think the fields are unlikely to be profitable. But because they straddle, or are near, the median line that Japan wants to use to demarcate its exclusive economic zone, Japan felt it had to mount a challenge when China started development of the Shirakaba (Chunxiao to the Chinese) field in 2004. Kudos therefore to Chinese President Hu Jintao and Japanese Prime Minister Yasuo Fukuda for their courage in forging an accord despite knowing there would be people on either side who will perceive the deal as a sell-out to the other party. The two leaders did so by putting the contentious demarcation issue on the back burner. This was a smart, face-saving measure. More than material benefits, details of which have still to be worked out, the agreement is valuable for psychological reasons as it eases the path for cooperation on far more important issues, such as the development of the Mekong region and the security of East Asia. With climate change an ever-growing worry, Japan and China also need to work together to address the problem of how the world must curb excessive emissions of greenhouse gases after the Kyoto Protocol lapses in 2012.

Unfortunately, the East China Sea is still not quite the 'sea of peace, cooperation and friendship' that both sides would like it to be. Japan's latest tiff with Taiwan over the Senkaku islands (Diaoyutai to the Taiwanese), sparked by the sinking of a Taiwanese fishing boat in the vicinity, is a reminder that tempers can easily flare up. One hot-headed politician in the new Taiwanese administration had even mentioned the word 'war'. But the political wisdom that China and Japan have been able to draw on in resolving an issue that many had thought was beyond solution brings new optimism that other disputes can also be settled, and in equally level-headed fashion.