Japan will ask China to pay for damage to two patrol vessels caused by a collision with a Chinese trawler in disputed waters, Tokyo has said.
"We will be asking for the boats to be returned to their original condition," government spokesman Yoshito Sengoku said at a news conference.
The collision earlier this month led to the worst diplomatic crisis between the two neighbouring countries in years.
The trawler captain, held by Japan for two weeks, was freed on Friday.
Chief Cabinet Secretary Yoshito Sengoku said it was now China's turn to decide whether it wanted to mend bilateral ties.
"At this point, the ball is now in China's court," he said.
Detentions
The collisions happened near disputed islands in the East China Sea, known as the Senkaku islands in Japan and the Diaoyu islands in China.
Japan said it believed the Chinese trawler had deliberately rammed the Japanese vessels.
Tokyo has turned down China's demand for a formal apology, insisting it has handled the case strictly in accordance with its own laws.
The BBC's Roland Buerk in Tokyo says Japan's government has been widely criticised at home for the decision to free the captain, which Prime Minister Naoto Kan said was made by prosecutors alone.
Mr Kan said the captain had been released without charge to promote "mutually beneficial" ties with China.
But the rift could be hugely damaging for Japan's economy, as China is the country's biggest trading partner, our correspondent says.
Beijing had cut off ministerial-level contacts between the two countries and thousands of Chinese tourists pulled out of trips to Japan.
Concerts by Japan's top boy band SMAP due to take place in Shanghai were cancelled by the Chinese organisers.
Tensions were further heightened last week when China detained four Japanese men.
The four, who were working for a Japanese construction company, were questioned on suspicion of filming in a military zone.