Since Japanese Prime Minister Abe Shinzo visited Beijing in October 2006, China-Japan relations have been back on the right track. Both China and Japan agreed that to make efforts to establish strategic relations of mutual benefit. Although there are still many problems between China and Japan, if the two countries can deal with the sensitive issues with great care and continue to develop their relationship with dedicated efforts, they will enjoy greater cooperation based on their shared common interests in many fields. Now is the first time in history that both China and Japan are strong powers in Asia. They face the problem of how to accept each other. How to prevent irrational nationalism from becoming the mainstream of either government’s policy is a very significant issue in China-Japan relations. China and Japan share common interests in economic and security fields. In order to further speed up China-Japan economic cooperation, it is necessary for them to develop a framework for a Sino Japanese Free Trade Area in the near future. Both China and Japan should approach bilateral relations from a win-win standpoint. The Japanese prime minister must not visit the Yasukuni Shrine again. China and Japan should make great efforts to establish an East Asian community with other Asian countries. Finally, China, the United States and Japan should have a more balanced trilateral relationship.