Japan on Friday was set to release a Chinese trawler captain at the heart of a fierce territorial row with China that has threatened ties between Asia's two biggest, and increasingly interdependent, economies.
A prosecutor from Naha city on Japan's southern Okinawa island said they had decided to free the Chinese boat captain, whose trawler collided this month with two Japanese patrol boats in waters near islands both sides claim, sparking a bitter row.
The decision reflected consideration for Sino-Japanese ties, the prosecutor told a news conference, parts of which were broadcast on Japanese TV.
"It is a fact that there was the possibility that Japan-China relations might worsen or that there were signs of that happening," Chief Cabinet Secretary Yoshito Sengoku told a news conference. "Our ties are important and both sides must work to enhance our strategic and mutual beneficial relations."
The release followed the detention of four Japanese nationals who were being investigated on suspicion of violating Chinese law regarding the protection of military facilities, although Japan's top government spokesman denied a link between the two matters.
Japanese prosecutors have not said when the captain will be released, but China said it was sending a chartered plane on Friday to bring him back.
"The Chinese government will welcome this," said Liu Jiangyong, an expert on Japan at Tsinghua University in Beijing. "I think this will be a turning point, a symbolic step, that will now ease the tensions that have risen between China and Japan."
But he added: "But the basic issue of jurisdiction over the Diaoyu Islands is a long-term issue that won't be resolved for a long time. That issue will remain and dealing with it will test the wisdom of politicians on both sides."
The roots of the trawler dispute lie in a long-standing disagreement over sovereignty in an area with potentially rich natural gas resources, and the feud over a single fishing boat has underscored the fragility of ties long troubled by feuds over wartime history.
China's terse response to the Japanese decision suggested that ill-will could linger after Japanese prosecutors said they had the right to charge the captain even if they were releasing him. The disputed islets are known as the Diaoyu islands in China and the Senkaku islands in Japan.
"Any form of so-called judicial procedure that the Japanese side takes against the boat captain would be illegal and invalid," Chinese Foreign Ministry spokeswoman Jiang Yu on the the Ministry's website (www.mfa.gov.cn).
Japanese Finance Minister Yoshihiko Noda warned earlier that worsening ties between the two countries would be bad for both economies.
"A cooling of relations between Japan and China over the Senkaku problem would be bad for Japan's economy, but it would also be a minus for China," he told a news conference. "It's desirable that both sides respond in a calm manner."
Japan's sluggish economy has become increasingly reliant on China's dynamism for growth. China has been Japan's biggest trading partner since 2009 and bilateral trade reached 12.6 trillion yen ($147 billion) in the January-June period, a jump of 34.5 percent over the same time last year, Japanese data show.
China has cancelled diplomatic meetings and student visits to protest against the trawler captain's detention, and concerns were simmering that Beijing is holding back shipments of rare earth minerals vital for electronics and auto parts.
Trade Minister Akihiro Ohata told a separate news conference that Tokyo had confirmed there was no official export ban on rare earth minerals, but added that the ministry was still looking into the matter after hearing from traders that exports had been suspended.
Beijing also has territorial disputes with southeast Asian nations in the South China Sea, where Washington has come out in favour of a multilateral approach, raising China's hackles.
A Japanese foreign ministry spokesman confirmed earlier in the day that four Japanese nationals employed by construction firm Fujita Corp had been detained on suspicion of breaking Chinese law regarding the protection of military facilities.
A spokeswoman for Fujita Corp said that five of its employees were missing in China -- four Japanese nationals and one Chinese national. The employees were in China in connection with a project to dispose of chemical weapons abandoned in China by the Japanese military at the end of World War Two.
Japan to free China boat captain in sea dispute - UPDATED
Japan was set to release a Chinese trawler captain at the heart of a fierce territorial row with China.