Xia Hong-bo, 35, was on duty when the 2,962-tonne Jia Hui collided with the 498-tonne Eifuku Maru No. 18 on Friday, the official said.
The bodies of five of those aboard the smaller vessel have been recovered. A sixth man is still missing, a coastguard official said.
Xia has been questioned on suspicion of professional negligence over the pre-dawn accident, which occurred in waters off Japan's Izuoshima island, around 100 kilometres south of Tokyo.
The Japanese ship capsized following the accident, while the 2,962-tonne Sierra Leone-registered cargo vessel was unaffected.