Beijing is following the situation in the East China Sea closely "and we reserve rights to further actions", General Liang Guanglie, China's defence minister, said through an interpreter at a joint news conference with his US counterpart Leon Panetta.

"Of course, that being said, we still hope for a peaceful and negotiated solution to this issue," Liang said.

The islets, known as Senkaku in Japan and Diaoyu in China, are uninhabited but situated in rich fishing waters and said to sit atop valuable natural resources. They are controlled by Japan but claimed by China and Taiwan.

The general blamed Tokyo for the spike in tensions, saying the archipelago has belonged to China for centuries, dating back to the Ming dynasty.

"The current escalation of tension over this dispute was totally caused by the Japanese side," he said.