Li's efforts to recover China's prestige in Korea were undercut by Japan, and, in 1885, Li and the leading Japanese statesman, Ito Hirobumi, in effect agreed to a joint protectorate over the contested peninsula. In 1894 Japan went to war with China over Korea.

In this war, Li's northern fleet bore the brunt of the conflict with Japan; virtually no assistance came from China's two other modern fleets. Again China lost a modern naval war and had to cede Formosa (Taiwan) and the Liaotung Peninsula to Japan, to recognize Korean independence, to open new treaty ports, to pay a large indemnity to Japan, and to grant to the Japanese all of the advantages hitherto preempted by Westerners under the unequal treaties. Li had tried to avoid this war, but his influence, nonetheless, suffered because of it. He personally opened peace negotiations in Japan in March 1895 but was wounded by a Japanese fanatic--and, ironically, it was this attack, which excited Japanese sympathy, that somewhat ameliorated the harsh peace terms. (Certain Western powers, including Russia, forced the retrocession of the Liaotung Peninsula--which Russia in effect appropriated in 1898 anyway.)

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Sino-Japanese War  (1894-95), conflict between Japan and China that marked the emergence of Japan as a major world power and demonstrated the weakness of the Chinese Empire. The war grew out of conflict between the two countries for supremacy in Korea. Korea had long been China's most important client state, but its strategic location opposite the Japanese islands and its natural resources of coal and iron attracted Japan's interest. In 1875 Japan, which had begun to adopt Western technology, forced Korea to open itself to foreign, especially Japanese, trade and to declare itself independent from China in its foreign relations.

Japan soon became identified with the more radical modernizing forces within the Korean government, while China continued to sponsor the conservative officials gathered around the royal family. In 1884 a group of pro-Japanese reformers attempted to overthrow the Korean government, but Chinese troops under Gen. Yüan Shih-k'ai rescued the King, killing several Japanese legation guards in the process. War was avoided between Japan and China by the signing of the Li-Ito Convention, in which both nations agreed to withdraw troops from Korea.

In 1894, however, Japan, flushed with national pride in the wake of its successful modernization program and its growing influence upon young Koreans, was not so ready to compromise. In that year, Kim Ok-kyun, the pro-Japanese Korean leader of the 1884 coup, was lured to Shanghai and assassinated, probably by agents of Yüan Shih-k'ai. His body was then put aboard a Chinese warship and sent back to Korea, where it was quartered and displayed as a warning to other rebels. The Japanese government took this as a direct affront, and the Japanese public was outraged. The situation was made more tense later in the year when the Tonghak rebellion broke out in Korea, and the Chinese government, at the request of the Korean king, sent troops to aid in dispersing the rebels. The Japanese considered this a violation of the Li-Ito Convention, and they sent 8,000 troops to Korea. When the Chinese tried to reinforce their own forces, the Japanese sank the British steamer "Kowshing," which was carrying the reinforcements, further inflaming the situation.

War was finally declared on Aug. 1, 1894. Although foreign observers had predicted an easy victory for the more massive Chinese forces, the Japanese had done a more successful job of modernizing, and they were better equipped and prepared. Japanese troops scored quick and overwhelming victories on both land and sea. By March 1895 the Japanese had successfully invaded Shantung and Manchuria and had fortified posts that commanded the sea approaches to Peking. The Chinese sued for peace.

In the Treaty of Shimonoseki, which ended the conflict, China recognized the independence of Korea and ceded Taiwan, the adjoining Pescadores, and the Liaotung Peninsula in Manchuria.

China also agreed to pay a large indemnity and to give Japan trading privileges on Chinese territory. This treaty was later somewhat modified by Russian fears of Japanese expansion, and the combined intercession of Russia, France, and Germany forced Japan to return the Liaotung Peninsula to China.

China's defeat encouraged the Western powers to make further demands of the Chinese government. In China itself, the war triggered a reform movement that attempted to renovate the government; it also resulted in the beginnings of revolutionary activity against the Manchu rulers of China.