This article challenges the prevailing view that China is displacing Japan as Asia's leader and the pre-eminent power in Asia. On the contrary, it argues that in understanding the future of Northeast Asia and the broader Asia–Pacific, it would be a mistake to look only to a rising China and to relegate Japan to a diminishing position. China's rise does not automatically herald Japan's decline. Japan is an emerging, not a retreating power. The rise of China is both obscuring and accelerating the transformation in Japan's regional and global position. Japan is increasing its economic power, technological capabilities, military reach, soft power and diplomatic influence. Furthermore, the rise of China makes Japan strategically more important to the United States and to other countries in the Asia Pacific. Japan will become the main regional counterweight to China and an indispensable partner in America's strategy of balancing China.