The eight uninhabited islands and rocks in question lie in the East China Sea. They have a total area of about 7 sq km and lie northeast of Taiwan, east of the Chinese mainland and southeast of Japan's southern-most prefecture, Okinawa.
They matter because they are close to strategically important shipping lanes, offer rich fishing grounds and are thought to contain oil deposits.
The islands are controlled by Japan. The latest row, in September 2010, was sparked by Japan's seizure of a Chinese trawler that collided with two coast guard vessels near to the islands. What is Japan's claim?
Japan says it surveyed the islands for 10 years and determined that they were uninhabited. That being the case, on 14 January 1895 it erected a sovereignty marker that formally incorporated the islands into Japanese territory. The Senkaku islands became part of the Nansei Shoto islands - also known as the Ryukyu islands and now as modern-day Okinawa prefecture.
After World War II Japan renounced claims to a number of territories and islands including Taiwan in the 1951 Treaty of San Francisco. But under the treaty the Nansei Shoto islands came under US trusteeship and were then returned to Japan in 1971, under the Okinawa reversion deal. Japan says that China raised no objections to the San Francisco deal. And it says that it is only since the 1970s, when the issue of oil resources in the area emerged, that Chinese and Taiwanese authorities began pressing their claims. What is China's claim?
China says that the Diaoyu islands have been part of its territory since ancient times, serving as important fishing grounds administered by the province of Taiwan. The Ministry of Foreign Affairs says that this is \"fully proven by history and is legally well-founded\".
Taiwan was ceded to Japan in the Treaty of Shimonoseki in 1895, after the Sino-Japanese war. When Taiwan was returned in the Treaty of San Francisco, China says the islands - as part of it - should also have been returned. But Beijing says Kuomintang leader Chiang Kai-shek did not raise the issue, even when the Diaoyu islands were named in the later Okinawa reversion deal, because he depended on the US for support. Separately, Taiwan also claims the islands. Have there been incidents before?
China's Ministry of Foreign Affairs says that the issue should be shelved for future settlement and that the two sides should try to prevent it from becoming \"a disturbing factor\" in bilateral ties. There have nonetheless been sporadic incidents over the islands.
In 1996 a Japanese group established a lighthouse on one of the islands. Chinese activists then sailed repeatedly to the islands and in one incident, Hong Kong activist David Chan jumped into the sea and drowned. Since then, there have been periodic attempts by Chinese and Taiwanese activists to sail to the islands. In 2004, Japan arrested seven Chinese activists who landed on the main island.
There have also been face-offs between Japanese patrol boats and Chinese or Taiwanese fishing vessels. In 2005, 50 Taiwanese fishing boats staged a protest in the area, complaining of harassment by Japanese patrols. So what next?
The Senkaku/Diaoyu issue complicates efforts by Japan and China to resolve a dispute over oil and gas fields in the East China Sea that both claim.
It also highlights the more robust attitude China has been taking to its territorial claims in both the East China Sea and the South China Sea in recent months.
In the latest row, Beijing cancelled talks on the oil and gas field issue. Small anti-Japanese protests were held in several cities in China.
China also cancelled a visit by 1,000 Japanese students to the Shanghai Expo and a concert by a top Japanese band.
In the end, Japan released the entire crew of the trawler - first the 14-member crew and then the captain, several days later.
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