At this stage, there seems little point in arguing over who the "true" owners of the Diaoyu Islands are. Did the Japanese really discover the atolls in 1885? Or was it the Qing Dynasty who stumbled upon the group of uninhabited islands many years ago? This is of little importance now. Both countries are convinced beyond doubt that the islands - known in Japan as the Senkakus - are rightfully theirs, and no amount of evidence to the contrary will sway them.
The question is: why is everyone so keen to get their hands on a few barren rocks off China's coast?
It's been suggested that there are oil reserves in the sea around the Diaoyu Islands, and this is why they have been targeted by powerful countries like China and Japan. Others point towards the fact that Taiwan, which has also joined the fray, has been known to fight with Japan over fishing rights in the area.
Another theory is that Japan and the US plan to set up a military base on the strategically-located islands - this is also a possibility given the support Japan has been receiving from the Americans over the years.
Regardless of what initially prompted Japan to purchase the islands from their owners (and thus ignite this crisis), it's clear that none of the parties is going to back down. Doing so would be a sign of weakness in the eyes of their citizens.
It's a delicate situation, to say the least. China will soon have a new leader, Japan will probably hold an election within months, and we're in the run-up to the US presidential election.
The Diaoyu dispute is a distraction from the economic problems faced by both China and Japan. But leaders have to appear strong if they are to remain in power.
At the moment, Sino-Japanese hostility is dangerously high. But the US, while being "officially neutral", is adding fuel to the fire by supporting Japan.
Although Beijing realises the dangers, there seems to be only a slim chance for the issue to be resolved peacefully.
Ideally, the two sides would like to continue to do what they have been doing in the past: nothing at all. As Deng Xiaoping said in 1978: "Our generation is not wise enough to find a common language on this question." Perhaps his words are just as valid today.