Beijing on Saturday demanded an apology and compensation from Tokyo over the "unlawful" detention of a Chinese trawlerman that sparked a major row, despite Japan's decision to release him.
In a far from conciliatory statement, China's foreign ministry said the disputed islands at the centre of the diplomatic standoff were Beijing's "inherent territory" and Tokyo's actions were illegal and invalid.
"(The arrest) seriously infringed upon China's territorial sovereignty and violated the human rights of Chinese citizens," the ministry said in a brief statement.
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"Japan's detention, investigation or any form of judiciary measures for the Chinese trawler and fishermen are unlawful and invalid," it said, adding: "The Japanese side must make apology and compensation for the incident."
But Japan had turned down that demand, a report in Tokyo said, as the government there faces accusations that it caved in to China's bullying by deciding on Friday to release the trawler captain.
Japanese prosecutors cited the deepening rift between Beijing and Tokyo in their decision to release the skipper, who was arrested after his boat collided with two Japanese coastguard vessels in the East China Sea.
Zhan Qixiong, 41, had acted on the spur of the moment and not committed a premeditated criminal act and had no prior criminal record in Japan, said Naha district deputy chief prosecutor Toru Suzuki in a televised press conference.
Chinese state television showed Zhan receiving a hero's welcome after the government-chartered plane sent to fetch him touched down at Fuzhou, capital of the southeastern province of Fujian, in the early hours of Saturday morning.
Making victory signs with his fingers and clutching a bunch of flowers, a smiling Zhan was greeted by his wife, son and government officials.
"I am thankful to the party, the government and my fellow citizens for my peaceful return," Zhan told reporters.
"My detention by Japan was illegal. The Diaoyu Islands are part of Chinese territory. I firmly support the Chinese government's position."
The row started when Japan's coastguard arrested the captain on September 8 after his trawler collided with two of their patrol boats near a disputed island chain, called Senkaku by Japan and Diaoyu by China.
In the ensuing row, China issued a series of harsh diplomatic protests, summoned Japan's ambassador Uichiro Niwa six times, once after midnight, and cancelled official visits, energy talks and joint cultural events.
Japan on September 13 released the ship's 14 Chinese crew and allowed them to fly home on a Chinese government-chartered plane, but on the same day Beijing protested over the skipper's continued detention.
Chinese Premier Wen Jiabao this week weighed in and threatened "further actions" as Japanese traders reported China had blocked exports of rare earth metals, used in products from iPods to electric cars, a claim Beijing denied.
Further ramping up tensions, China this week detained four Japanese nationals who were working on a bid for a project to clear up chemical weapons left from the Japanese occupation before and during World War II.
Chinese state media warned on Saturday that the dispute -- the worst in years between the two Asian giants -- had caused "long-lasting" damage to delicate Sino-Japanese relations.
An editorial in the Global Times newspaper said China should "remain cold towards Japan for a while" to send a clear message to Tokyo that "irresponsible policies have consequences."
Analysts said the trawler captain's release was seen boosting China's communist leaders at home, where the case sparked strong nationalist sentiment among a domestic audience still sensitive about Japan's past militarism.
However, Japanese media warned his return to China gave the impression that Tokyo's young centre-left government will yield to diplomatic pressure.
