China scraps celebration as Japan row heats up

China has cancelled a celebration marking 40 years of the resumption of diplomatic ties with Japan, as the two Asian powerhouses remain locked in a standoff that has sparked fears of war.

Beijing is trying to establish sovereignty over a remote group of islands in the South China Sea, known as Diaoyu in China and Senkaku in Japan. An official from the Chinese People's Association for Friendship with Foreign Countries told the Xinhua news agency that Japan had "ruined the atmosphere of the 40th anniversary". He said the Tokyo government's decision to buy the islands was "illegal" and "severely damaged" relations.

Thousands of Chinese took to the streets last week in violent protests that saw Japanese businesses attacked, cars sent on fire and restaurants closed, although they have been largely reined in for now. In Tokyo, an estimated 800 people marched at the weekend to the Chinese embassy, and shouted slogans denouncing China as a "brute state" and "fascist". Nationalists waved Japanese flags and placards pledging to fight over the islands.

Japan's coastguard continues to play a game of cat-and-mouse with Chinese fishing patrols near the islands, about 2,000 km south-west of Tokyo. With Japan facing an election before the end of the year and China about to embark on a once-in-a-decade leadership transition, the chances of compromise are slim.

In Hong Kong The South China Morning Post reported that the ruling Chinese Communist Party would send a delegation to Japan today. But Japanese diplomats have suggested they are not optimistic of a resolution to the dispute until the leadership transition in China later this year.