TOKYO — Japanese prosecutors decided Friday to release the captain of a Chinese fishing boat involved in a collision near disputed islands whose detention raised tensions between the Asian neighbors.
The incident had driven relations between China and Japan to their worst in years. Beijing angrily demanded the captain be released and cut off ministerial-level talks with Japan.
Prosecutors in Okinawa, southern Japan, where the captain has been in custody for more than two weeks, said they would let him go, citing the damage done to relations with China. It was unclear when authorities would release him.
The case is still pending, but it looked increasingly unlikely that charges would be filed.
The news came a day after said it was investigating four Japanese suspected of illegally filming military targets and entering a military zone without authorization, as well as reports the country had suspended Japan-bound shipments of rare earth metals critical in advanced manufacturing.
The 41-year-old captain, Zhan Qixiong, was arrested on Sept. 8 after his fishing trawler collided with Japanese coast guard vessels near a string of islands in the East China Sea called Diaoyu or Diaoyutai in Chinese and Senkaku in Japanese.
Located 120 miles (190 kilometers) east of Taiwan, the islands are controlled by Japan, but also claimed by Taiwan and China. They are surrounded by rich fishing grounds and are regularly occupied by nationalists from both sides.
The arrest sparked anti-Japanese protests in numerous locations around China, and the dispute spilled over to cultural ties. On Tuesday, Chinese Premier Wen Jiabao threatened "further action" against Japan if it did not release the captain immediately.
At a press conference in Naha, Okinawa, prosecutors said Zhan was "just a fishing boat captain" and had no criminal record in Japan. They did not perceive any premeditated intent to damage the Japanese patrol boats, said Toru Suzuki, the office's vice prosecutor.
"We have decided that further investigation while keeping the captain in custody would not be appropriate, considering the impact on the people of our country, as well as the Japan-China relations in the future," he said.
The territorial dispute is one of several that have strained China's ties with its Asian neighbors while its increasingly powerful navy enforces claims in disputed waters and its growing demand for resources sends commercial ships farther from its shores.
Washington has signaled its intention to protect its interests in the region and keep its waterways open for commerce, urging China to resolve separate, long-running territorial disputes with its Southeast Asian neighbors involving the Spratleys and other islands in the South China Sea.
President Barack Obama was expected to sign a communique on the issue with Southeast Asian leaders later Friday in New York. Beijing has accused Washington of interfering in an Asian issue.
Chinese Foreign Ministry spokeswoman Jiang Yu said China would send a charter flight to bring back Zhan after he was freed.
"I reiterate that what Japan did to the Chinese boat captain in its so-called judicial proceedings were illegal and invalid," Jiang said in a statement posted on the ministry's website.
Security remained tight around the Japanese Embassy in Beijing on Friday, following protests in recent weeks that have flared in cities around China. Soldiers and police stood watch for several blocks surrounding the building, with SWAT team, paramilitary and riot police vans parked nearby.
Analysts in both Japan and China said the captain's release would immediately ease tensions.
"This move allows the Chinese to save face," said Tsuneo Watanabe, a senior fellow at the private Tokyo Foundation. "The one straight demand from the Chinese side was for the captain to be released."
A future fine or penalty imposed by Japan will allow Tokyo to save face as well, as the country had said it only wanted to operate under its applicable laws, he added.
Liu Jiangyong, a professor with Institute of International Studies at Tsinghua University in Beijing, called it a "wise decision" by the Japanese government that could lead to stronger ties.
"The decision may become a turning point for the improvement of relations between the countries, and both sides should grasp the opportunity to get relations back to the correct track," Liu said.
Still, China and Japan will have to resolve new issues that have emerged this week.
Fujita Corp., a Japanese construction company, confirmed Friday that four of its Japanese employees were being questioned by Chinese authorities. The company said the men traveled to Hebei province on Sept. 20 to gather information about the area, and were working to prepare a bid for a project to dispose of chemical weapons abandoned in China by the Japanese military during World War II.
Chinese authorities accuse the Japanese of entering a military zone without authorization.
Fujita Corp. identified the four employees as Yoshiro Sasaki, 44, Hiroshi Hashimoto, 39, Sadamu Takahashi, 57 and Junichi Iguchi, 59.
Meanwhile, Japanese trading company officials said that starting Tuesday, China had halted exports to Japan of rare earth elements, which are essential for making superconductors, computers, hybrid electric cars and other high-tech products.
Japan imports 50 percent of China's rare earth shipments. One trading house official, who declined to provide his name because he was not authorized to speak to the media, said he did not know when exports will resume. Companies using the rare metals are believed to have stockpiles that could last several months.
On Thursday, China's Trade Ministry denied reports that Beijing is tightening curbs on exports of rare earths to Japan.