If one is left scratching one's head as to why the Chinese government's dispute with Japan went straight from lowly fishing captain with an anger management issues to the premier of the China making open threats, it is possibly best to remember that Chinese tend to have long memories...and that what the Chines government is thinking about is not just the government's loss of control over the anti-Japanese rioting to self-organizing groups of citizens in 2005 but the humiliating and costly aftermath of the Taiwan Punitive Expedition of 1874 -- where the Qing Dynasty's failure to step up and respond to a Japanese assertion of sovereignty in the Western mode led to the loss of China's claims on the territory of the Kingdom of the Ryukyus -- modern day Okinawa Prefecture.
The total failure of 1874, where the Qing Dynasty somehow maneuvered itself into accepting the premise that the government of Japan had the right to
1) take punitive action on behalf of Ryukyuans as if Ryukyuans were citizens of Japan,
2) invade nominally Chinese territories in order to pacify nominally Chinese subjects
still stings...and the Japanese assertion of sovereignty over the Senkaku Islands and the EEZ around it is salt in that lingering wound.
What we have is the George Santayana admonition ("Those who do not remember the past are condemned to repeat it") in reverse. By remembering the past -- the Qing government's repeated blunders arising from its lack of appreciation of assertions of sovereignty under the Westphalian system and the violence protests of 2005 -- the present Chinese government has over-reacted, creating a no-win situation featuring a too vigorous assertion of sovereignty under the prevailing international system.
By far the best solution for the Chinese government would have been to wash its hands of the situation, claiming that whatever happened to the captain was his problem and without implications as regards the Senkakus dispute. By asserting that its fishing ship captains can do whatever they want wherever they want, however, the Chinese government has positioned itself into being the defender of international hooliganism. By escalating the dispute to cover all Sino-Japanese relations, they have telegraphed that their rise to power has come without a commensurate increased sense of proportion.
Such is the fate of those who remember too well the slights and failures of yesteryear and who live in fear of the judgment of their own people.