TOKYO - JAPAN said Friday vigilance was needed on China's naval activities and the risk that North Korean leader Kim Jong-Il's ailing health could lead to instability in the nuclear-armed state.

'We need to keep watch of China's maritime activities,' the defence ministry said in an annual white paper.

'Given the modernisation of China's navy and air force, it is expected that their capability will expand beyond China's adjacent waters,' it said, noting recent cases of Chinese vessels passing close to Japanese territorial waters.

The ministry also voiced concern about uncertainty over the North Korean leader's ailing health and who will succeed him.

'We cannot exclude the possibility that the regime will destabilise in time of a change in the power structure that may take place in the near future,' the white paper said.

'We need to keep a close eye on developments in North Korea, considering the ramifications of Kim Jong-Il's health problem and the succession issue,' added the report, which was approved by at a Japanese cabinet meeting Friday.

Japan, along with the United States, pushed hard for tough sanctions after the North's April 5 long-range rocket launch and after its second underground atomic test on May 25, which was followed by a series of missile launches.

The defence ministry report also renewed Japan's claim over islands disputed with South Korea. The Takeshima islets, called Dokdo in Korea, are an 'integral part of Japanese territory", the white paper said.

South Korea reacted angrily Friday to the renewed assertion of sovereignty over the islets, which are controlled by South Korea but have been claimed by Tokyo since the early 20th century.

'We strongly protest Japan's description of Dokdo as part of Japanese territory and demand an immediate correction by the Japanese government,' the South Korean defence ministry said in a statement. -- AFP