China will closely watch future actions by Japan regarding the Diaoyu Islands and the adjacent waters, and the actions will "shape China's countermeasure", Vice-Foreign Minister Zhang Zhijun said on Friday.

Tensions between China and Japan have soared since the Japanese government in mid-September finalized an illegal "purchase" of part of the islands, which have belonged to China for centuries.

The vice-foreign minister rejected Japan's accusation that China had "overreacted", saying that from the very beginning, Japan "seriously misjudged" the determination of the Chinese government and people to safeguard their sovereignty.

International disputes should be resolved peacefully through dialogue, Zhang said. However, China has principles and a bottom line.

"We'll never take a step back on territorial sovereignty," Zhang said in response to a question about whether China will take military action over the islands.

Zhang kicked off the first talks about the islands dispute with Japanese Vice-Minister of Foreign Affairs Chikao Kawai on Sept 25.

And Tokyo on Wednesday confirmed that a secret meeting between the vice-ministers of foreign affairs — the second in a month — was held during the weekend in Shanghai.

As for the frequency of bilateral consultations, Zhang only said the arrangement "should be agreed between both sides".

For China, the goal of the consultations is for Japan to get a clear picture of the situation, give up its illusion, face up to reality and correct its mistake, Zhang said.

Yang Bojiang, a professor of Japanese studies at the University of International Relations in Beijing, said the dialogue between Beijing and Tokyo has seen tangible progress since the peak of the islands crisis, but a major recovery of bilateral ties lies in Tokyo's readiness to alter its stance.

Four Chinese maritime surveillance ships continued to patrol the waters off the Diaoyu Islands on Friday, the Japanese Coast Guard said.

The Chinese ships also demanded that Japanese patrol vessels hovering at the scene leave immediately.

Tokyo on Friday vowed to acquire more maritime patrol vessels to deal with the regular presence of Chinese ships, Kyodo News Agency said.

Nearly 17 billion yen ($214 million) from the Japanese government's economic stimulus package will be used for the Japanese Coast Guard's military purchases, which include four cutting-edge patrol ships.

Zang Zhijun, a professor of Japanese studies of Fudan University in Shanghai, warned, "Despite the existing turbulence of Japanese politics and inconsistency within the ruling cabinet, the (Japanese) government's goal is clear: Getting rid of China's presence in the islands," Zang said.

Poor bilateral trade statistics on Friday continued to pour in with little sign of a resurgence amid the strained economic ties between China and Japan.

Statistics released on Friday show that major Japanese automakers witnessed a major monthly slump in production in the Chinese mainland, a year-on-year plunge of 28 percent, Japan's Jiji Press Agency reported.

Hiromasa Yonekura, chairman of the Japan Business Federation urged on Friday the ruling Democratic Party of Japan to "patch up" the frayed Japan-China ties, Japan's Yomiuri Shimbun newspaper reported.

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