By Linda Sieg
TOKYO (Reuters) - When Japan's central government confirmed a media leak on July 7 that it was considering buying islands at the core of a feud with Beijing, the timing could hardly have been worse given the symbolism in China, where a 1937 incident on that date is seen as the start of Tokyo's full-fledged invasion of the country.
"To China, it looked as if Japan had done this on purpose with evil intentions," said a Japanese source familiar with Tokyo's stance on the row, adding the timing was accidental.
That instance of ill-timing was just part of the complex diplomatic and domestic puzzle that led to a flare-up in the row over the islands, which the Japanese government bought this month in an attempt to defuse a crisis by preempting another, more provocative plan by the nationalist governor of Tokyo.
The feud triggered violent protests in China, threatened business ties between Asia's two biggest economies and risked maritime clashes in the geopolitically vital region.
On Wednesday, China's leader-in-waiting, Xi Jinping, denounced the purchase of the Japanese-controlled islands as a "farce" and said Tokyo should "rein in its behavior".
Both sides are sure to keep arguing over who is ultimately to blame for the row, which has its roots in mutual mistrust and rivalry as well as China's bitter memories of Tokyo's wartime aggression. But for Japan, the risks of miscalculating how China can apply its growing clout have been put on potent display.
"It is worse than 2005 and maybe the worst since the end of the war," said Yoshihide Soeya, director of the Institute of East Asian Studies at Keio University in Tokyo, referring to the sometimes violent anti-Japanese protests seven years ago.
The origins of the row over the islands, called the Senkaku in Japan and the Diaoyu in China, stretch back decades and the idea of nationalizing them had been kicking around for years.
But the current flare-up can be traced to April, when Tokyo Governor Shintaro Ishihara abruptly floated a plan to have his metropolitan government buy three of the five islets from their private Japanese owner and build facilities there to "protect" them from Chinese incursions.
ROCK AND A HARD PLACE
Many in Japan worry China has become far more aggressive in pressing its claims to the uninhabited isles and resent Beijing's efforts to bolster those claims by sending fishing and patrol boats to the surrounding waters. Those concerns were flagged in the government's annual defense white paper in July.
Caught between the rock of Ishihara's bid, which was backed by a majority of Japanese voters and for which he quickly amassed donations, and a hard place of outraging China by buying the islands itself, Japan's government opted for what officials hoped China would come to see as the lesser of two evils.
"The government understood that that would lead to a very difficult situation vis-a-vis China, so they decided to acquire the islands themselves, using the buzzword that the islands needed to be controlled in a calm way," said Hitoshi Tanaka, a former senior Japanese diplomat.
Japanese officials sought to convey that message both through public comments as well as back channels.
"Nationalizing the islands would be a better policy option for the sake of peaceful and stable relations (between the two countries)," Deputy Prime Minister Katsuya Okada told reporters earlier this month. "Our stance should be understood by the Chinese people."
Evidence suggests, however, that while Japanese policymakers recognized the risk of buying the islands, they may have overestimated the ability or willingness of Beijing to curb public outrage ahead of a once-in-a-decade leadership change.
"We expected this level of demonstrations, but the violence and damage to Japanese companies went beyond what the Chinese government could control," said a ruling party lawmaker close to Prime Minister Yoshihiko Noda. "That was a bit unexpected."
Critics say Japanese policymakers should have been more sensitive to domestic dynamics in China, where the government is preoccupied with a leadership change that will happen at a Communist Party congress that opens as early as next month.
"They could have tried to negotiate with the owners to postpone a decision until the end of the year or next year," said Linda Jakobson, director of the East Asia Program at the Lowy Institute for International Policy in Sydney, Australia.
"I think they certainly misread the fragility of the political situation in China at the moment."
Japanese policy makers did consider delay, but rejected that option. "It wouldn't have been good for a new Chinese government to have to deal with the Senkaku problem. We thought it was better to build new ties with the new government," the Japanese lawmaker said.
Persuading China to accept the islands' nationalization, though, may have been a forlorn hope from the start, especially in light of Xi Jinping's comments on Wednesday, even as China moved to snuff out more anti-Japanese protests.
Even if the current tensions abate, whether or when Tokyo and Beijing can repair the damage to ties is hard to predict.
"In the past, the Chinese government advocated setting aside the dispute and developing bilateral relations. That period of history is over. We're in a new phase of history, and that was a totally inevitable outcome of Japan purchasing the islands," said Liu Jiangyong, a professor at Tsinghua University in Beijing who advises the government.
That sentiment has its mirror image in Tokyo. "Japan's policy toward China has been abnormal," the Japanese lawmaker said. "This is no longer an era when we should do whatever China says."
(Additional reporting by Tetsushi Kajimoto and Kaori Kaneko in Tokyo and Chris Buckley in Beijing; Editing by Nick Macfie)