Japan in turn called for talks to resolve the feud, but rejected China's territorial claim to disputed islets near where the Chinese skipper was apprehended by Japanese coast guard crews two weeks ago.

In comments played throughout Wednesday on Chinese state television Prime Minister Wen Jiabao said in New York, "I strongly urge the Japanese side to release the skipper immediately and unconditionally."

"If Japan clings to its mistake, China will take further actions and the Japanese side shall bear all the consequences that arise," he said, urging Tokyo to "correct its mistakes to bring relations back on track".

The dispute between Asia's rising giant and its most advanced economy has drawn concern in Washington, and both Wen and Japanese Prime Minister Naoto Kan are due to hold talks at the UN this week with US President Barack Obama.

Japanese Foreign Minister Seiji Maehara, also visiting New York for the UN General Assembly, dismissed China's longstanding claim over the rocky islets, which lie near possible oil and gas fields in the East China Sea.

"There is no territorial issue," he said.

However, Japan said Wednesday it was ready for dialogue.

"It would be good to hold high-level talks, including a comprehensive and strategic dialogue, as quickly as possible," Chief Cabinet Secretary Yoshito Sengoku told a news conference in Tokyo.

Asked if Kan should try to hold direct talks with Wen on the UN sidelines, Sengoku said: "That would be one option. We should also check if there are other ways, as soon as possible."

Chinese foreign ministry spokeswoman Jiang Yu later reiterated Beijing's position that Tokyo should "unconditionally release" the trawler captain, Xinhua reported.

"It is futile to play tricks by deceiving the world and international public opinion," said Jiang in a written statement, according to Xinhua.

China on Tuesday dashed any hope of fence-mending talks between Wen and Kan, with Jiang saying the atmosphere was "not suitable for such a meeting".

China has repeatedly demanded that detained skipper Zhan Qixiong be released, summoning Japan's ambassador six times, calling off several official visits and planned negotiations, and cancelling cultural events.

It further announced on Sunday that it had suspended high-level exchanges after Japan decided to extend Zhan's detention until September 29, when he must be either indicted or released.

On Wednesday, Japan's Tourism Minister Sumio Mabuchi declined a meeting with Zhu Shangzhong, head of China's tourism administration, at an international meeting in Japan.

China's delegates at the meeting also said they would skip a reception hosted by Mabuchi, Kyodo News reported.

The dispute has caused anger among the Chinese public, which is still ambivalent towards Japan after its forces occupied swathes of northern China before and during World War II.

At the weekend, small groups of anti-Japan demonstrators rallied in three Chinese cities over the captain's arrest near the islands, known as Senkaku in Japan and Diaoyu in China, but the protests were brief and peaceful.

On Wednesday a group of Hong Kong nationalist activists were stopped from leaving the territory's waters by police after setting sail for the disputed chain aboard a 150-foot (45-metre) vessel, media reported.

US Deputy Secretary of State James Steinberg has said the flare-up is "unfortunate" in light of efforts by China and Japan to repair relations in recent years.

Sino-Japanese ties hit rock-bottom during the 2001-2006 premiership of conservative Junichiro Koizumi due to his annual visits to the Yasukuni shrine in Tokyo, which honours 2.5 million Japanese war dead, including war criminals.

Relations have gradually warmed as Koizumi's successors have refrained from visiting the shrine, seen by Japan's East Asian neighbours as a symbol of Tokyo's past imperialism.

earlier related report
Major events in Japan-China maritime row
Tokyo (AFP) Sept 22, 2010 - Japan's arrest of a Chinese fishing boat captain in disputed waters two weeks ago has sparked the worst diplomatic row in years between the Asian giants. Here are major events in the dispute:

September 7:

Two Japan Coast Guard patrol vessels, the Yonakuni and the Mizuki, and a Chinese trawler collide in the East China Sea near a chain of disputed islands known as Senkaku in Japanese and Diaoyu in Chinese.

Japanese patrol boats chase the ship, stop it and take its captain and crew into custody, on suspicion the skipper deliberately rammed the boats.

China expresses "great concern", urges Japan to stop its "so-called law enforcement activities" and summons Japanese ambassador Uichiro Niwa.

September 8:

In the early hours, the Japan Coast Guard arrests Chinese captain Zhan Qixiong, 41, and takes him to Ishigaki island, while patrol ships escort his fishing boat with 14 crew there.

Japan informs China's ambassador Cheng Yonghua that "Tokyo will enforce its domestic laws" against the captain, who could face three years jail if charged with obstructing public officers on duty.

Some 35 Chinese protesters rally outside Japan's embassy in Beijing.

September 9:

Japanese prosecutors take over the case against Zhan.

China says Japan applying domestic law against him is "absurd, illegal and invalid" and warns of "a serious impact" to relations.

September 10:

In its annual Defence of Japan report, Tokyo voices concern over Chinese naval activities and demands more transparency over its defence spending.

September 11:

A Chinese ship orders two Japan Coast Guard survey vessels to stop operations around 280 kilometres (175 miles) northwest of Okinawa. Tokyo launches a protest with Beijing.

China says it will postpone scheduled talks with Japan on jointly exploring gas fields, called Shirakaba by Japan and Chunxiao by China, in another disputed part of the East China Sea.

September 12:

China summons Japan's Niwa for a fourth time, in the early hours, warns Japan must make a "wise political decision".

September 13:

Japan releases the 14 Chinese crew but not the captain, and the men fly home on a Chinese government-chartered plane.

China's foreign ministry demands the skipper's release and says that "all the people of China... condemn the illegal Japanese behaviour in one voice".

September 14:

China announces senior lawmaker Li Jianguo has cancelled a Japan visit.

A Taiwanese boat carrying anti-Japanese protesters arrives at the disputed islands but turns back when confronted by Japan Coast Guard ships.

Japan's Prime Minister Naoto Kan survives a party leadership challenge.

The United States calls on both sides to resolve the row through dialogue.

September 17:

Japan says China has shipped drilling equipment to the disputed gas field.

Newly appointed Japanese Foreign Minister Seiji Maehara warns China against unilateral drilling activities.

September 18:

More than 100 Chinese activists rally near Japan's embassy in Beijing, on the anniversary of Japan's 1931 invasion of Manchuria. Smaller protests are held in Hong Kong, Shanghai and Shenyang -- in northeast China.

September 19:

A Japanese court authorises a 10-day extension of Zhan's detention until September 29, when he must be indicted or freed.

September 21:

Japan's top government spokesman calls for calm and urges all sides to avoid arousing "narrow-minded, extreme nationalism".

Japanese pop band SMAP cancels planned Shanghai concerts next month.

China rules out a meeting at the UN general assembly later in the week between Kan and Chinese Premier Wen Jiabao, saying "the atmosphere is not suitable".

September 22:

Wen threatens "further actions" if Japan does not release the captain "immediately and unconditionally".

Japan calls for high-level talks to resolve the dispute, but dismisses China's claim to the islands.

Pro-China activists set sail from Hong Kong bound for the islands.

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