I think that Japan knows that it overplayed its hand and it's trying to ease some of the tension. But they have to do so without sacrificing Takaichi's dignity, so this guy really is being sent to China to get bullied. And it works for China because China is in very much a bullying mood right now. I didn't think that even ordinary Chinese people would be so bloodthirsty towards Japan, but it seems like even they're forward to a fight.
China isn't going to go to war against Japan. It's not practical; not while Taiwan is still tied to the US, and it doesn't suit China's current interests. That said, it's not going to be just talk - they're going to ramp up the gears diplomatically, economically, and militarily. I can expect a lot more patrols out by the Senkakus, excercises next to Japanese home waters, and a lot more intrusion flights into Japanese airspace. The goal is to wear down the JSDF by forcing them to respond, and to overall humiliate Japan.
It's honestly a perfect opportunity for China to publicly pick on an American ally, and Japan has managed to alienate everyone else in region so that nobody is willing to help them. In any other circumstance China would be happy to work with the other party to ease tensions but you can tell that the Foreign Ministry has no intention of doing so in this case.
