China claims disputed islands are 'sacred territory' In a sign of the economic fallout, Japanese automakers Toyota Motor Corp, Nissan Motor Co Ltd and Suzuki are curtailing production in China in the wake of the protests that shuttered dealerships and darkened their sales prospects in the world's top car market. China's meetings with Japanese diplomats - at the United Nations and a day earlier in Beijing - suggest Beijing does not want tensions over the island chain, believed to be in waters rich in natural gas deposits, to lead to a rupture in relations. This is, after all, the Year of Japan-China Friendship. But the unyielding tone of China's published remarks suggests that the row is far from over. Beijing has repeatedly called the islands its "sacred territory since ancient times." "The Japanese move is a gross violation of China's territorial integrity and sovereignty, an outright denial of the outcomes of victory of the world anti-fascist war and a grave challenge to the post-war international order," said Yang, according to the Xinhua summary of his comments. Sino-Japanese ties have long been plagued by China's bitter memories of Tokyo's military aggression in the 1930s and 1940s as well as present rivalry over regional resources and clout. The row coincides with a once-in-a-decade leadership change in China, while Japanese Prime Minister Yoshihiko Noda's ruling party faces a drubbing in an election expected in months, domestic dynamics that are make it hard for either side to retreat. Mr Noda is under fire from the main opposition party, which picked former prime minister and security hawk Shinzo Abe as its new leader, and possible next premier, on Wednesday. Abe has been most vocal of the candidates in urging Tokyo take a tougher line in its territorial dispute with China and South Korea. Japan, which says the islands' purchase was meant to fend off a more provocative bid by the nationalist governor of Tokyo, Shintaro Ishihara, to have his metropolitan government buy them, is trying to keep communications channels open. China postponed a ceremony marking the 40th anniversary of the resumption of diplomatic ties with Japan, but an official at the Japan-China Economic Association said Toyota Motor chairman Fujio Cho and Hiromasa Yonekura, chairman of Japanese business lobby Keidanren, and other representatives of Japan-China friendship groups would attend an event on Thursday in Beijing. Patrol vessels from the two countries have also been playing a tense game of cat-and-mouse in the waters near the disputed islands, raising concerns that an unintended collision or other incident could escalate into a broader clash.