US Defense Secretary Leon Panetta visited both China and Japan last week in the hopes of making headway on the two countries' dispute over the Diaoyu Islands. Panetta told Chinese National Defense Minister Liang Guanglie that the US-Japan Security Treaty, signed in 1960, would in fact obligate the United States to come to the defense of Japan. However, Panetta stressed how the US-Japan alliance should not be viewed as American support for Japan's territory claim over the islands. Media reports, including from the Asahi Shimbun, one of Japan's national newspapers, indicate that Liang strongly expressed China's opinion that the islands should not be covered by the treaty.

This opinion was further reflected in the Sept. 20 edition of People's Daily, the official newspaper of the Communist Party of China. "The US-Japan Security Treaty is a byproduct of the Cold War era, and should not damage the interests of third parties, including China…Any nation that seeks to interfere in the Diaoyu Islands issue will experience a loss of their interests," the article stated. The warning comes at a sensitive time.

Late last week, US Assistant Secretary of State Kurt Campbell formally announced that the US will recognize the disputed Diaoyu Islands as protected under the US-Japan security treaty. In short, this means the US recognizes these islands as part of Japan and will stand with Japan if military action ensues. While the US recognizes these islands to be part of this treaty, it is simultaneously urging both sides to resolve this dispute quickly and diplomatically.

So how can the US hold true to its promise not to take sides in the territorial dispute given Panetta and Campbell's remarks?

Since the Cold-War era, Japan and the United States have been part of a mutual security treaty that guarantees collective self-defense against foreign attackers. In this agreement, the US has pledged resources across the land, sea, and air to Japan in the event of an attack. Furthermore, the US recognizes that the Diaoyu are included in the treaty because the islands are presently under Japan's control.

The US is trying to balance its long-standing alliance with Japan and its increased cooperation and economic partnership with China. Although Panetta's comments are not intended to give the impression that the US is prepared to settle the dispute militarily, a misunderstanding of the comments could exacerbate the situation in the East China Sea.

So is the United States effectively staying neutral in the dispute?

The scope of the US-Japan Security Treaty covers all Japanese-controlled territories; it does not discriminate based on the status of a particular territory. So even though the Diaoyu Islands are currently in dispute, the US appears to be forthcoming in telling China the islands would be covered under the treaty. Assistant Secretary Campbell's statement simply reiterates the contractual obligation the US has with Japan.

Some Chinese officials argue that the United States is behind the push for nationalization of the islands that has occurred in Japan over the past few months. One Chinese government source, as quoted in the Asahi Shimbun, even went so far as to say "If we can contain the actions of the United States, Japan will stop its provocative actions."

If anything, it is in the US' best interests (economically speaking) to resolve this issue as soon as possible, and without military action. Besides, an escalation is not in the best interest of President Obama, who is currently up for re-election and has no military experience. Obama only leads his opponent Mitt Romney by marginal figures, and perceived impending military action might cause a huge last minute swing in the polls.

Essentially, the US is trying to smooth over tensions in the East China Sea to try and help all parties involved recover as much projected growth as they can for the remainder of the year. We are already seeing how increased tensions are bringing decreased economic outlooks for the remainder of 2012, and if this dispute continues it will weaken forecasts for 2013. An amicable and diplomatic solution is required, and fast.

Catherine Wood is a freelance writer currently based in Beijing.

Opinion articles reflect the views of their authors, not necessarily those of China.org.cn