In the early 1900's both Japan and Britain had considerable financial, political and industrial investments in China and Korea. To protect these investments Britain and Japan signed a naval alliance on January 30, 1902. The alliance obligated the nations to remain neutral if one of them went to war, but if a second power, or several others, united in warfare against one of them, the other was obligated to come to its aid, engage in war, and make peace in total agreement with the other. The alliance was the first of three the two nations would sign with each other in the next twenty years and had a significant impact on World War I, post World War I relationships, and World War II.
One of Britain's main concerns was the threat posed by French and Russian naval power in the Far East. Russia's military action had placed them in a position where they were challenging Britain's dominant position in China. In order to ensure their continued dominance, Britain entered the alliance with Japan who also had similar fears of Russia's actions.
Japan also had a favorable position that they wanted to keep secure. They had begun to gain economic power, but they feared other nations would take advantage of them as China had been. They felt that the alliance would help advance them towards industrialization as well as permanent sovereignty. Tension between Japan and Russia was another factor that pushed Japan into the alliance. Russian military expansion was encroaching on their interests in both China and Korea. Japan knew they could not go to war without any support and therefore sought an ally in Britain who shared their fear of Russian expansion, which eventually lead to the Russo-Japanese War of 1905.
As a result of the Anglo-Japaneese alliance, China suffered economically and lost territory to Japan. They also became very cautious of both Japan and Britain and signed an agreement with Germany to have some security. The agreement was that the Germans return the Chinese city of Kiao Chow for a different city after the anticipated war that would better suit their needs. These discussions between China and Germany led Britain to call on Japan to watch the relations between the two countries. Japan's actions did not stop there, they also attacked German enclaves in China to help the Allies' cause.
After the War the United States began protecting and speaking for China and Britain began to side with the U.S. at the Treaty of Versailles. This angered Japan because now their only ally was siding with one of their largest rivals. This led to the termination of the Anglo-Japanese alliance in 1922 when Britain and the U.S. rejected Japan's statement of racial equality and forced them to limit their navy to 3/5 the size of the U.S. and British navies. Japan was extremely insulted and bitter about the result and remained angered until they got their revenge at Pearl Harbor.
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Weale, Putnam. An Indiscreet Chronicle form the Pacific. New York: Dodd, Mead, and Company, 1922.