DAVOS (AFP) - Japan on Wednesday appealed to the world to restrain "military expansion" in Asia or risk a regional conflict with catastrophic economic consequences.

In a landmark speech to the World Economic Forum in Davos, Prime Minister Shinzo Abe issued what amounted to an appeal for international support in a potentially explosive dispute with China over islands in the East China Sea.

"We must restrain military expansion in Asia... which otherwise could go unchecked," Mr Abe told the annual meeting of global business and political leaders, which Chinese Foreign Minister Wang Yi is due to attend on Friday.

"If peace and stability were shaken in Asia, the knock-on effect for the entire world would be enormous," Mr Abe added.

"The dividend of growth in Asia must not be wasted on military expansion." Although Abe did not explicitly mention China, his speech had been flagged up in advance by Japanese officials as an alarm call to an influential audience over what Tokyo sees as Beijing's increasing attempts to bully Japan and other neighbours.