Tokyo , Japan ( CNN ) -- Japan 's Ministry of Foreign Affairs says relations with China are `` extremely important , '' but Beijing 's demand for an apology and compensation over the detention of a Chinese fishing boat captain is `` completely groundless and is utterly unacceptable for Japan . '' The statement Saturday went on to assert Japanese jurisdiction over the islands where the captain was detained and declared that the dispute was handled in accordance with Japanese law . Zhan Qixiong was detained earlier this month after his trawler collided with Japanese vessels near disputed islands in the East China Sea . He was freed on Friday . Earlier , Satoru Sato , a spokesman for the Japanese Foreign Ministry , made similar statements to Japan 's Kyodo news agency in response to China 's apology demand . Despite this call for an apology , China 's Foreign Ministry said in a statement that the two sides should resolve the problems through dialogue and consultation , according to Chinese state media . Zhan was accused of obstructing Japanese public officers while they performed their duties , China 's Xinhua news agency said . He arrived home safely on Saturday , according to Xinhua . `` We decided to suspend the charges in consideration of the Japan-China relationship , '' the Japanese prosecutor in the case said . The arrest tensions between the two countries , with Beijing accusing Japan of `` unlawful and invalid '' arrest of the captain and his crew of 14 , according to Xinhua . China considers the Diaoyu Islands and most of the South China its property , disputing neighboring countries ' claims . In Japan , the islands are known as the Senkaku . The clash over territorial waters and islands -- and the natural resources . that go with them -- is a flash point in the Asia-Pacific region . Word of the captain 's release quickly followed the arrest of four Japanese nationals in China . The four are being investigated for entering a military zone without authorization and videotaping military targets , Chinese state media said . Neither country linked the captain 's case with the arrest of the four Japanese nationals . CNN 's Kyung Lah contributed to this report .
NEW : China asserts Japanese jurisdiction over disputed islands . Japan says China 's call for an investigation is ' groundless ' Detention of Chinese nationals sparked bitter relations between China and Japan .