"We pay close attention to the development of the (Diaoyu Islands) issue and we reserve the right to take further actions," China's Defence Minister Liang Guanglie said yesterday during a joint press conference with visiting US Defence Secretary Leon Panetta.
On a day which marks the anniversary of Japanese occupation of parts of mainland China in 1931, thousands waving Chinese flags and chanting anti-Japan slogans gathered outside the Japanese mission here, some throwing eggs and plastic bottles at the heavily guarded building.
Both the Asian nations are fighting over the uninhabited group of islands in the East China Sea - called Diaoyu by China and Senkaku by Japan.
"Of course we still hope for peaceful and negotiated solution to this issue and we hope to work together and work well with Japanese government in handling the dispute," Liang said while acknowledging that the issue came up for discussion during the talks with Panetta.
Panetta, meanwhile, urged "calm and restraint by all sides" over the disputed islands. "The US continues to be concerned about challenges to maritime security in East Asia," Panetta said.
Top Japanese company Honda Motor has closed all five of its China plants while Nissan shut two of its three factories. Canon and Panasonic have also temporarily closed some of their factories in the country following anti-Japan protests.