I also offered the following suggestion to my friend in Ohio.
“There's also a fourth option, in which a private entity could be set up to purchase it and hold it untouched in perpetuity. That would restore the islands to their pre-purchase circumstances. Can Keidanren members pony up 2.5 billion yen? Yes, it can! Loss of face for the Japanese government. A little.”
Let me amplify this for my blog. I think that it would be acceptable to the Chinese authorities if they really meant what they said about keeping to the original tacit understanding, or finding third way as they are reported to have indicated in early September. If I’m right and business executives are willing to engage in a little private public diplomacy, it would be doing Shinzo Abe a great favor because he wouldn’t have to figure out how he, as prime minister, would stand up to the Chinese without totaling the Japan-China relationship.
Of course I know that the Noda administration would never do anything like that since it would be tantamount to admitting that they botched the whole affair. The catch? Chinese authorities are unlikely to roll back some of the measures that they took, like naming the islands and drawing territorial lines. Still, it’s more plausible than any idea for actual resolution that includes Japanese concessions on sovereignty, which would be unacceptable to any Japanese administration, while any proposal that does not include one would be a non-starter with the Chinese. Note that economic retaliations are not an option for obvious reasons.