China fishing boat captain to be freed by Japan. Will it ease tensions?

Japan moved Friday to defuse an escalating diplomatic row with China, when prosecutors said they would release a Chinese fishing boat captain accused of having rammed Japanese patrol boats in disputed waters.

The decision came hours after China revealed that police had arrested four Japanese citizens for allegedly entering a military zone without authorization and filming.

Though Japanese government spokesmen said they had not influenced the local prosecutor’s decision, it is likely to leave Prime Minister Naoto Kan open to criticism that he bowed to pressure from his giant neighbor.

Deputy Public Prosecutor Toru Suzuki told reporters that “taking into account the impact on our citizens and Japan-China relations, our judgment was that it would have been excessive to prolong the investigation and his detention.”

Chinese leaders had piled increasing pressure on Tokyo over the detention of the trawler captain, with Prime Minister Wen Jiabao publicly demanding his immediate release earlier this week, and warning otherwise of “further action.”

There were reports Thursday that China had cut off exports to Japan of rare earths used in the manufacture of a range of high-tech goods from wind turbines to iPhones. It was unclear, however, whether shipments had been halted because of the dispute over the trawler captain’s detention or because China has already reached its 2010 quota for rare earth exports.

Either way, “it is an undeniable fact that there were signs that Japan-China ties may have deteriorated,” said Japan’s chief cabinet secretary, Yoshito Sengoku.

This might have been an unnerving prospect for Japanese economic policymakers, given China’s importance, as export-dependent Japan’s biggest trading partner, to Tokyo’s growth prospects.

“The Japanese economy’s future seems to depend on whether the problem is solved quickly,” Japanese Economy Minister Banri Kaeda told a press conference earlier Friday, before the prosecutor’s announcement.

There was no news Friday evening of the fate of the four Japanese citizens arrested in Hebei Province, west of Beijing. An executive with the Fujita Corp construction company said the four are company employees and had last been heard from in a one-word text message on Tuesday reading “help.”

It is unclear how quickly Sino-Japanese relations might return to their precrisis levels. The Japanese prosecutor said he reserved the right to indict the trawler captain even after his release.

The Chinese Foreign Ministry responded to the announcement with a curt statement on its website that Beijing would send an airplane to collect the captain, and that “any so-called legal proceedings by Japan against the captain would be illegal and invalid.”