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In 1895 the Japanese Government issued a cabinet resolution claiming the Senkaku Islands as Japanese territory. After UN ECAFE issued a report stating that considerable reserves of oil and natural gas might lie around them in 1969, Chinese government also announced its own claim to the Diaoyutai. It was one of the most hottest issue that may harm the friendly relations between Japan and China since then. This article is organized into three sections. I will open with the historical backgrounds and the origins of this territorial dispute before and after the normalization of China and Japan. The second section of my artice examines the political and economic dimensions of this problem till the middle of the 2000s. And the last section of this article observes the political meaning of the Senkaku dispute not only in the context of the bilateral relations between two countries but also its implications to changing international relations in the East Asia including our nation. The issue of sovereignty over the Senkaku Islands emerged in 1971 when Tokyo and Washington signed an agreement on the reversion of Okinawa. Under the accord, the United States returned the administrative rights over the Ryukyu Islands(including the Senkaku Islands) and the Daito Islands in Okinawa to Japan. The Republic of China(Taiwan), which Japan then recognized as the legitimate Chinese administration, protested the move. It is not part of the Ryukyu Islands, but historically and geographically part of Taiwan. The People's Republic of China, with which Japan had no diplomatic relations at the time, also claimed that the Diaoyutai is part of its territory because it is part of Taiwan. Japan and China signed a joint communiqué establishing full diplomatic relations. In order to expedite the improvement of bilateral relations, both sides agreed to put off to discuss the issue of the sovereignty of the Senkaku Islands, deferring it to later generation to decide. This left unresolved a potentially explosive bilateral territorial dispute. Especially Japan noted with concern China's adoption of its 1992 Law on Territorial Waters that reasserted its claim to the Senkaku Islands. Japan and China attempted to play down bilateral tensions over the Senkaku Islands, but it has proven to be a sensitive issue. Its importance is generally attributed to underseas oil and gas resources and competition to define exclusive economic zones favorable to either side. Many meetings and consultations have been held between the two countries with regard to the East China Sea issues, and the development of natural resources in the East China Sea. In 2008, as a first step toward realizing understanding between the two countries' leaders of making the East China Sea a Peace, Cooperation and Friendship. Japan and China agreed that the two countries cooperate with each other without prejudice to the legal position of both countries during the transitional period pending agreement on the delimitation. A Japanese patrol boat and a Chinese fishing boat collided on September 7, 2010 in waters off the Japanese-controlled Senkaku Islands in the East China Sea. The Japan Coast Guard arrested the captain of a Chinese fishing vessel on suspicion of obstructing public duties in connection with collisions accident. The Government of Japan on September 25 released the captain of a Chinese fishing boat. It seems that the decision to release the captain of a Chinese fishing boat was a political decision made by the Japanese Government. But Japan rejected China's demand that Japan apologize and offer compensation for detaining a Chinese fishing boat captain over collisions near the disputed Senkaku Islands. Even though the Japanese basic position is that Senkaku is an integral part of Japanese territory, and that there is no territorial dispute with China, it is clearly that the Senkaku territorial dispute with China is not resolved. It is of my opinion that the collisions between a Chinese trawler and Japan Coast Guard patrol boats near disputed territories in the East China Sea reflects not only international structural changes but also China-Japan's bilateral structural changes, and that it may also be the prelude to East Asia's new power game between Japan and China.