Stuff happens that has nothing to do with rationality:
Chinese state media initially fanned the flames of hatred but then tried to tamp them down. The police gave the demonstrators free rein but also directed them to go home once they vented their anger.
This dual approach typifies Beijing's attitude. The Communist Party benefits from keeping anti-Japanese feeling simmering, since it derives its historic legitimacy from (supposedly) driving out the Japanese invaders and restoring China to its proper place in the world. But anger against Japan must also be kept within bounds, lest protesters blame China's leaders for not being more assertive with Tokyo.
The Chinese think they can turn anger on and off in the service of the party and nation. So far it has worked.
What happens when it doesn't work? What happens when the mobs insist that China deal with Japan harshly, and the Communist Party fears that mob more than they fear Japan or America?
Heck, what happens if China decides that a Japanese confrontation with Taiwan (which also claims the islands) means that China must rush to Taiwan's defense? How will Taiwanese react to that?
Don't tell me there isn't a good opportunity for something very bad to go wrong in this:
That's a Reuters photo of Japanese and Taiwanese coast guard ships exchanging blasts of water. Let's hope there is no collision or accidental firing of a weapon.
And for kicks, let's remember why these little specks in the ocean are so important now.