The sordid story is: Coastguard boarded the vessel and detained it's captain and crew. The captain was allegedly too drunk to stand up by himself when he was arrested.
As per normal procedure, they let the crew go back to China, but because... of the conduct of the captain, police decided to detain him to put together a case to charge him.
When the captain was not released with the crew, China went crazy. They canceled Japanese school trips to China, canceled invitations of Japanese officials to visit the Expo, canceled cultural tour parties for the Expo, cancelled a SMAP concert, and put a stop on exports of "rare earths" to Japan, that are needed to manufacture hi-tech products. The government also allowed violent demonstrations take place that led to destruction of Japanese property in China.
Then four Japanese engineers were arrested and charged with spying for taking video of a military facility near where they were contracted to dispose of Japanese WWII munitions.
After about 9 days of holding the captain still without charging him, the Okinawa prosecutors office announced that in light of the "national interest", they would release the captain and not proceed with prosecuting him.
He was flown back to China on a chartered jet and welcomed back by national officials as a hero - even invited to the national people's congress to pose with top politicians.
Since then, the ban on Japanese officials going to Expo remained, one Japanese engineer was held for a further two weeks, rare earths are still not being exported to Japan, and even when Japan tried to arrange a meeting at APEC, China cancelled it after the Japanese foreign minister had explained the events to other leaders saying that the captain was responsible.
China has demanded an apology for the arrest and "violation of its sovereignty". Japan has demanded the Chinese government reimburse Japan the costs of repairs to the two coast guard boats that were rammed. China is still basically retaliating against Japan over this over a month later, in ways that the Japanese foreign minister said were "hysterical", which prompted more anger.
The bottom line here is that this is less to do with sovereignty, and more to do with use of nationalism and anti-Japanese emotion in Chinese domestic politics. This is a button that gets pressed every few years to legitimize the government there. It's also interesting in the context of China becoming more assertive, and willing to use aggressive diplomacy, where it has historically been more passive. I guess it is a sign of what all countries dealing with China will need to prepare for in the future as China continues to rise.
Peace
What are the Senkaku Islands?
This following user uploaded all the videos!
http://www.youtube.com/JapaneseWolf00
Thanks to MetagameHawaii | for the following...
White ship is JSDF Coast Guard
Part 1:
http://img259.imageshack.us/img259/6295/1288890837830.jpg
Part 2:
http://img101.imageshack.us/img101/7614/1288890895250.jpg
http://www.youtube.com/watch?v=lv031K_lV4I&feature=player_embedded
http://www.sankakucomplex.com/2010/11/05/senkaku-ramming-video-leaked/
http://mdn.mainichi.jp/arts/news/20101103p2g00m0et056000c.html
http://news.tv-asahi.co.jp/ann/news/web/html/201105003.html
http://mdn.mainichi.jp/arts/news/20101103p2g00m0et056000c.html
http://www.asahi.com/english/TKY201011010271.html
http://www.japantoday.com/category/crime/view/woman-who-abandoned-newborn-in-bowling-alley-restroom-in-2005-arrested
http://www.asahi.com/english/TKY201011020416.html
If you have time, please visit Japundit and please vote this up!
http://www.japundit.com/Politics/Gimmeaflakemans_Moron_Army_Has_Found_the_Senkaku_Island_videos
More links
http://www.globalsecurity.org/military/world/war/senkaku.htm
http://www.youtube.com/watch?v=FZE3DVKvi8U&feature=related
Is Taiwan a country? Not really what this video is about... but...
http://geography.about.com/od/politicalgeography/a/taiwancountry.htm