Beijing warned Tokyo on Tuesday to "give up the illusion" during ministerial talks as the government issued a white paper over the Diaoyu Islands in the latest move to defend the nation's sovereignty.
Observers said that while there was a willingness for further dialogue, despite few signs that tension is easing, room for maneuver was limited.
During talks concerning the Diaoyu Islands on Tuesday in Beijing, Vice-Foreign Minister Zhang Zhijun told his Japanese counterpart Chikao Kawai that Beijing will "absolutely not tolerate any unilateral action taken by Japan that infringes on China's territorial sovereignty".
The ministerial meeting was requested by Japan and Kawai arrived in Beijing on Monday.
Tokyo illegally "purchased" some of the islands in the East China Sea in September. The islands have belonged to China for centuries. Tokyo's provocation is "an outright denial of the outcome of the victory of the global anti-fascist war and poses a huge challenge to the post-war international order", Zhang warned.
Both countries agreed on further talks on the islands, and Zhang warned the Japanese to "give up the illusion, face up to its erroneous actions and correct them with credible steps".
Yang Bojiang, a professor of Japanese studies at the University of International Relations in Beijing, said Japanese Prime Minister Yoshihiko Noda's ability to make concessions will be limited with a general election looming and an escalation of tension cannot be ruled out.
"However, policy makers on both sides know well the interdependence of China-Japan economic and trade ties," Yang said.
Lu Yaodong, director of the department of Japanese diplomacy at the Chinese Academy of Social Sciences, warned that Tokyo is perhaps tactically trying to complicate the issue.
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