Japan to buy disputed isles in move bound to infuriate China

TOKYO, Sept 10 (Reuters) - Japan has agreed to buy a group of islands disputed with China from their private owners, a government official said on Monday, a day after Chinese President Hu Jintao warned Japan against any "wrong decision" in claiming sovereignty.

Japan aims to nationalise the uninhabited islands in the East China Sea as soon as possible to control them in a peaceful and stable manner, Chief Cabinet Secretary Osamu Fujimura said.

The islands, called Senkaku in Japan and Diaoyu in China, are located near rich fishing ground and potentially huge maritime gas fields, and have been at the heart of long-running territorial disputes between the world's second and third-largest economies.

"This is just the ownership of land, which is part of Japan's territory, moving from one (private) owner to the state, and should not cause any problem with other countries," Fujimura said.

"Having said that, we don't want the Senkaku issue to affect overall Sino-Japanese relations. Because it is important to avoid misunderstanding and unforeseen development, we have been closely communicating with China through diplomatic channel to this day."

But China is likely to take a different view. The row was already affecting Japanese car sales in China, a Chinese official said on Monday

"It is illegal and invalid for Japan to buy the islands via any means. China firmly opposes it," China's CCTV quoted Hu as telling saying Japanese Prime Minister Yoshihiko on the sidelines of an Asia-Pacific Economic Cooperation (APEC) summit in Vladivostok on Sunday.

"China will unswervingly safeguard its sovereignty. Japan must realize the severity of the situation and not make a wrong decision."

Noda decided on the purchase after the governor of Tokyo, Shintaro Ishihara, a harsh critic of China, proposed his own plan to buy the islands.

Fujimura did not disclose the purchase price, but Japanese media said last week the government was set to pay 2.05 billion yen ($26.26 million).

Relations between the Asian powers, plagued by a bitter wartime past and present rivalry over regional clout, have been difficult for years.

Despite such friction, economic ties between Japan and China are deeper than ever and both countries are believed to want to keep the feud from spiralling out of control.

But the islands row appears to have hit sales of Japanese car makers in the world's biggest auto market.

Dong Yang, secretary general of the China Association of Automobile Manufacturers, told a news conference that Japanese car sales had slowed in August and he believes it was related to the dispute.

Nissan's chief operating officer, Toshiyuki Shiga, said last week that the row was having "some impact" on sales of Japanese car manufacturers as they were having difficulty in holding big, outdoor sales promotion campaigns. (Full Story)