Because Japan is part of the Pacific "Ring of Fire", and sits on 4 tectonic plates. So there are many volcanoes, but only a small percentage are active.
But Japan is hardly dangerous. Obviously you haven't been there - it looks though like you've been fed a steady dose of propaganda. As for the anti-Japanese editorializing, please stop. There are enough Korean trolls with their inferiority complex already here. Japan has a mess to clean up, and it will be expensive, but radiation levels except near the accident site are almost back to normal. You can see the latest data from May at:
http://radioactivity.nsr.go.jp/en/contents/7000/6742/24/192_0512.pdf
And long term there are no significant cancer threats, according to the UN:
http://www.japantoday.com/category/national/view/no-rise-in-cancer-seen-from-fukushima-nuclear-disaster-u-n
The cesium issue is something that has to be watched though, and the scientists are aware of it. Overall it doesn't mean Japan is going to hell, as a bunch of disgruntled competing Asian countries would like to see.
Japan has far bigger other problems to deal with, such as replacing its nuclear plants with viable other sources, plus demographic and tax base challenges. It's unclear what you mean by "lose to China" - China already is the second biggest economy in the world, but they are growing so unevenly and recklessly that it will have its own nightmare soon - Beijing will soon pollute itself out of existence unless something radical is done quickly. Their housing industry is set to collapse with massive gentrified housing complexes that nobody can afford to buy. Korea is not set to unify anytime soon, and if it does the headache it will have integrating people in the North will be far worse than what Germany had to go through. Plus the same demographic problems hitting Japan are creeping up in Korea as well. And "limitations of an island country"? Britain is an island country and had the biggest empire in the world for centuries, so that hardly flies either.
So please expunge the hyperbolic nationalist junk you are being subjected to, and see it as just another country - neither paradise nor hell, and nothing to dislike.