China says Japan ties anniversary ruined by island row

BEIJING (Reuters) - Next week's 40th anniversary of the normalization of diplomatic ties between China and Japan has been ruined by Japan's decision to buy a group of disputed islands in the East China Sea, the Chinese Foreign Ministry said on Friday.

A flare-up in a diplomatic row over the uninhabited islands, called Diaoyu in China and Senkaku in Japan, has triggered mass protests in China and heightened maritime tension as Chinese boats approached waters claimed by Japan.

"Previously, all concerned in China and Japan hoped that through this (anniversary) they could further advance relations between China and Japan," ministry spokesman Hong Lei told a daily news briefing.

"But due to Japan's erroneous action of illegally buying the Diaoyu islands, many plans have been ruined, and currently many activities have been affected. The culpability lies entirely with Japan."

Japanese media have reported that the China-Japan Friendship Association will go ahead with a large-scale ceremony in Beijing next week to mark Japan's switching of diplomatic recognition from Taiwan to China four decades ago.

China's National Tourism Administration has however cancelled plans to attend an international trade fair in Japan from Friday to Monday because of the tensions over the islands, China's official Xinhua News Agency said on Friday.

Sino-Japanese ties have long been plagued by China's bitter memories of Japan's military aggression in the 1930s and 1940s and present rivalry over resources. The seabed around the islands is believed to be energy-rich.

Japanese Prime Minister Yoshihiko Noda, who was comfortably re-elected ruling party leader and government chief on Friday, said Japan needed to act firmly but maintain calm in dealing with security challenges.

"Unfortunately there are concerns with regard to security and diplomatic issues. The important thing is to assert ourselves firmly from now on and make no concessions," Noda told ruling party lawmakers before the vote, without specifically mentioning the islands.

"At the same time we will steer diplomatic policy calmly and with a comprehensive view, without provoking or responding to provocation."

There is much at stake economically.

China, the world's second-largest economy, and Japan, the third-largest, have total two-way trade of around $345 billion, and Japanese companies including Toyota Motor Corp and Panasonic Corp have invested billions of dollars in China.

(Reporting by Chris Buckley; Writing by Ben Blanchard; Editing by Nick Macfie)