The problem is that both next governments are gonna be more hardline. Xi from what I've read from him is more hawkish... the Japanese opposition which is set to take power soon are more hawkish too... and on the slim chances that Romney gets elected, it won't help things either.
As for China and Japan being hurt by an economical war... it seems China doesn't THINK it would be that bad. (and what the policy makers think, not facts, matters in these kind of decisions)
Beijing hints at bond attack on Japan - Telegraph
Mr Jin said China can afford to sacrifice its low-value-added exports to Japan at a small cost. By contrast, Japan relies on Chinese demand to keep its economy afloat and stave off irreversible decline.
Its clear that China can deal a heavy blow to the Japanese economy without hurting itself too much, he said. It is unclear whether he was speaking with the full backing of the Politburo or whether sales of Japanese debt would do much damage. The Bank of Japan could counter the move with bond purchases. Any weakening of the yen would be welcome.