This tension risks the complete scrapping of recent planned reforms within the UN. Tensions between China/Japan, India/Pakistan, Germany/Italy, and Brazil/Mexico have made reforms a very low possibility in the coming year. Unless these tensions are toned down or resolved, it seems the UN will not be changed anytime soon. China, a permanent veto wielding member, has hinted that it might veto the UN reforms unless Japan changes attitude. However, public disgruntle over Japan is so great that one can truthfully say that if China does let Japan get a permanent seat, there is a possibility that the public will revolt. That is how strong the passion against the japanese are. Of course, not everyone is like that, but even the calm and moderate primarily the older generation have held principles where they will not support Japan but will not also violently hurt them. The issue that is raised is political instability in China if Japan does get a seat when the public is basically pissed off since the issue might be woven with other sensitive issues and thus a chain of events can lead to civil war, and I believe no one wants to see 1.3 billion people in war. Imagine how the French were, and if that happened with China, I believe WWIII will be inevitable.
Currently, only diplomatic and economic agreements can really sort thing out over this issue for the two and moreover, I hate to seem biased, but Japan should concede a little otherwise they will risk running into a dead end. Rather live another to fight than to die pathetically. (not exactly what the sayig should be but close enough) But current tensions are still rising with Japan allowing private drilling of the the disputed South China Sea border with China, which is linked to China's undersea oil wells a few kilometers away.