Isles spat: China does not rule out further action

BEIJING - China reserves the right to take further action over a territorial dispute with Japan but hopes to see it resolved peacefully, Chinese Defence Minister Liang Guanglie told a press conference after talks with American counterpart Leon Panetta amid the worst Sino-Japan tensions in decades.

Fears of armed hostilities in the region have grown along with the deterioration of ties between the two East Asian giants, after Tokyo moved last week to buy and nationalise a group of isles it calls Senkaku. China also claims these isles, which it calls Diaoyu.

Eleven Chinese patrol ships entered waters around the Japan-administered island group yesterday, after two Japanese activists set foot on one of the isles.

"We're very concerned about how the situation develops and reserve the right to take further action," said General Liang, in his first public comments on the escalating spat. But China still hopes to resolve the spat through peaceful negotiation, he said yesterday, the 81st anniversary of a railway bombing used by Japan as a pretext to invade Manchuria.

Anger against Japan continued to be vented in cities across China, with some Japanese businesses closing shop to avoid trouble.

Japan's Fast Retailing covered up the signs of its Uniqlo clothing store at Beijing's popular Sanlitun area and shut some 19 outlets yesterday. Nearly 200 stores under the 7-11 chain also closed.

US Defence Secretary Mr Panetta, who was in Tokyo before Beijing, called for both sides to keep calm and keep communication channels open. He also urged Beijing to boost military contact with the US to deepen trust and reduce the risk of conflict.

"Our goal is to have the United States and China establish the most important bilateral relationship in the world, and the key to that is to establish a strong military-to-military relationship," said Mr Panetta, who meets Chinese Vice-President Xi Jinping today.