Japan is in a policy box of its own making regarding the Senkaku island chain. China has raised the ante significantly by giving its Coast Guard the right to challenge and shoot back in any confrontation with Japan around the contested island chain.
China’s choice of using the Coast Guard instead of the PLA Navy (PLAN) in its confrontation with Japan was a clever policy move for two reasons:
(1) It gave the Chinese a sovereignty argument by having the Chinese Coast Guard carry on maritime law enforcement operations and patrols in and around the Senkaku Islands as if they were Chinese sovereign territory.
(2) It avoided a military confrontation between Japan’s Navy and China’s PLAN. While Japan’s Navy is far smaller than the Chinese, it is very professional and modern. China surely wanted to avoid giving Japan any excuse for a military operation as it would certainly draw in the United States. The US has a mutual defense treaty with Japan and Washington has also agreed that the island chain is covered under the treaty.