The Senkaku islands or the Diaoyu islands are eight uninhibited islands that lie in East China Sea, with a total area of seven square kilometers. The islands is an important shipping lane and a good fishing ground, apart from this, the islands are also thought to contain oil deposits. These islands are being claimed by both China and Japan because it lies northeast of Taiwan, east of China and southwest of Japan's city Okinawa.
Whereas China claims that Diaoyu islands were the part of their territory since ancient times, which served as an important fishing ground to the province of Taiwan. After the Sino-Japanese war, Taiwan was ceded by Japan, but it was returned back in the Treaty of San Francisco. Now, China claims that as the island was a part of Taiwan, it should also have been returned.
The latest dispute began when right-wing Japanese politician pledged to buy the the Senkaku islands or the Diaoyu islands from a private owner, in order to protect it from Chinese encroachment. And the Japanese government purchased the island for 2.05 billion dollars last week. Looking at this the Chinese government sent the patrol ships near the island, and now the government has started the protest against Japan.
China is Japan's largest trading partner and Japan is China’s second-biggest trading partner, largest outside investor and has employed about 10 million Chinese, says Japan’s Finance Ministry. So, both the countries are inter-dependent and this protest will affect the economies of both the countries, reportedThe New York Times.