Tokyo ( CNN ) -- A simmering dispute over islands in the East China Sea began to bite into trade between China and Japan on Tuesday as Chinese protests prompted Japanese companies to suspend work there . The latest demonstrations included a protest by hundreds of Chinese outside the Japanese Embassy in Beijing on the 81st anniversary of an incident that led to the Japanese invasion of China in 1931 . Flanked by a heavy police presence , the Chinese demonstrators marching past the embassy were vocal but orderly , shouting that the disputed islands belong to China . Rowdy demonstrations also took place near Japanese consulates in Shanghai , Guangzhou and Shenyang , according to CNN affiliate I-Cable . The protests appeared to be much more orderly than those that took place in many cities over the weekend , some of which turned violent . But they spurred some of Japan 's biggest manufacturers -- Toyota , Nissan , Honda , Mazda , Panasonic and Canon -- to halt production at some of their plants in China . Panasonic reported Monday that it would stop work at three Chinese plants after two of them were damaged during Saturday 's protests . Fallout widens from island dispute between China , Japan . China normally clamps down on public demonstrations , but has allowed the protests to go ahead . Protesters carried banners that read `` Do n't Forget the National Humiliation , '' according to photographs distributed by the state-run news agency Xinhua . Meanwhile , on the disputed islands , two Japanese men carried out a small-scale protest of their own Tuesday when they jumped from a fishing boat and swam to shore , spending a short amount of time on land , the Japanese Coast Guard reported . China and Japan are the world 's second- and third-largest economies , and trade between the two Asian powerhouses amounted to about $ 300 billion in 2010 , according to the U.S.-China Business Council . But political ties between Tokyo and Beijing have been strained over a cluster of islands that both countries claim , known as the Senkaku to the Japanese and the Diaoyu to the Chinese . They sit between Okinawa and Taiwan and have been under Japanese control for more than a century , but China claims they have been a part of its territory `` since ancient times . '' China reasserted that claim last week , sending ships to patrol the area after the Japanese government announced it would buy several of the islands from a Japanese family . That move revived an issue left unsettled by a peace treaty between China and Japan in the 1970s , Tung Chee Hwa , the administrator who led Hong Kong after China regained possession of the onetime British colony in 1997 , told CNN 's `` Amanpour . '' When that treaty was hammered out , `` There was one item on which they could not agree , so they agreed to disagree , '' Tung said . `` They shelved that argument but agreed there would be status quo , and there would be a joint effort to search for natural resources . '' But Japan 's decision `` really inflamed public opinion in China , '' he said . Background : How remote rock split China , Japan . The waters around the islands are a common fishing ground for Chinese trawlers , with more than 1,000 of them working in the area every year , China says . And the ocean floor may hold as much as 100 billion barrels of oil , according to the U.S. Energy Information Administration , as well abundant natural gas reserves that the Chinese are already seeking to tap . China needs fuel to supply its rapid industrialization -- but Japan , which is almost entirely dependent on imports of oil and gas , is concerned it 'll be cut off from those resources . China termed the deal `` illegal '' and sent six surveillance vessels into Japanese territorial waters on Friday , drawing protests from the Japanese government . A total of 11 Chinese government ships were near the islands on Tuesday afternoon , the Japanese Coast Guard said , adding that it had warned the vessels not to enter Japanese territorial waters . The dispute dates back to 1895 , when Japan captured the islands at the end of that year 's Sino-Japanese War . In 1932 , it sold the islands to descendants of the original settlers . Then the United States occupied them from the end of World War II until 1972 , when it signed a treaty returning them to Japan . `` The U.S. handed over the islands to Japan for its own purpose during the Cold War , '' Guo Xiangjiang , the deputy director of the China Institute of International Studies , told CNN . `` So , personally , I think the U.S. should take the blame for the dispute of Diaoyu island . '' Washington is Japan 's leading military ally and China 's leading trade partner , and Defense Secretary Leon Panetta has called on both sides to resolve the dispute peacefully during a visit to the region this week . `` It 's in no country 's interest for this situation to escalate into conflict that would undermine peace and stability in this very important region , '' Panetta said after his meeting with Gen. Liang Guanglie , the Chinese defense minister . For his part , Liang reiterated that the islands are part of `` China 's inherent territory . '' `` We reserve the right to take further actions , but we hope the issue will be properly resolved through peaceful ways and negotiations , '' he said , according to the state-run news agency Xinhua . Asia 's disputed islands -- who claims what ? A public initiative begun in April this year by the outspoken governor of Tokyo , Shintaro Ishihara , to raise money to acquire the islands for the city authorities set off a new cycle of tensions that included civilian protesters from both sides landing on the islands to stake their nations ' claims . Ishihara 's move put pressure on the government of Japanese Prime Minister Yoshihiko Noda to step in with its own bid , which resulted in the controversial deal last week with the Kurihara family , the private owners up until that point . Japan 's attempts to portray the purchase as a routine internal real-estate transaction , with the islands passing from one Japanese owner to another , has failed to placate the Chinese authorities . Messages and photos posted on Chinese social media sites showed angry mobs in numerous cities ransacking Japanese stores and restaurants as well as smashing and burning cars of Japanese make . The authorities rarely permit protests in China , prompting suspicion that the nationwide rallies over the weekend were government-sanctioned . In Beijing , police walking alongside the demonstrators were seen to ask spectators to join in instead of blocking the street . But by Saturday night , China 's state-run media had started appealing for restraint , running commentaries that condemned violence and lectured the public on the expression of patriotism . CNN 's Junko Ogura reported from Tokyo and Jethro Mullen from Hong Kong . CNN 's Stan Grant , Steven Jiang and CY Xu in Beijing contributed to this report .
NEW : China and China have `` agreed to disagree '' over the islands since 1932 . New protests in China come on a painful anniversary . one Asian men make a brief landing on one of the disputed islands . Japanese companies have suspended operations in Japan because of unrest .