Prime Minister Shinzo Abe has said Japan is prepared to be more assertive towards China as Beijing threatened retaliatory strikes if necessary.
During an interview with The Wall Street Journal Abe said Japan should take the lead in guarding against what he believed could be China's attempt to attain its diplomatic goals through force.
He said recent meetings with South East Asian leaders suggested the region sought leadership from Tokyo in terms of security amid China's more forthright diplomacy.
He told the newspaper: "There are concerns that China is attempting to change the status quo by force, rather than by rule of law. But if China opts to take that path, then it won't be able to emerge peacefully.
"So it shouldn't take that path and many nations expect Japan to strongly express that view. And they hope that as a result, China will take responsible action in the international community."
But during a interview today, a top retired Chinese diplomat said any move by Tokyo to contain China could prove to be "extremely dangerous". The defence ministry warned Japan not to underestimate China's resolve to take whatever measures necessary to protect itself.
China responded angrily to a Japanese media report saying Abe had approved a policy for Japan to strike foreign drones that ignore warnings to leave its airspace.
"Don't underestimate the Chinese army's resolute will and determination to protect China's territorial sovereignty," Defence Ministry spokesman Geng Yansheng said on the ministry's website. "If Japan does resort to enforcement measures like shooting down aircraft, that is a serious provocation to us, an act of war.
"We will undertake decisive action to strike back, with every consequence borne by the side that caused the trouble," Geng added.
Relations have broken down sharply in the past year, with the main point of conflict continuing to be over uninhabited islets in the East China Sea, known in Japan as the Senkaku islands and in China as Diaoyu.
Diplomacy has deteriorated further over visits by Japanese lawmakers this month to the Yasukuni shrine in Tokyo honouring both war dead and Japanese leaders convicted as war criminals.
China is also at odds with several South East Asian states contesting its claims to large swathes of the South China Sea.
Former Chinese foreign minister Tang Jiaxuan, addressing a forum in Beijing, said that Japan hoped to enlist the United Nations and the international community to curb China's actions in the region, according to media reports.
Tang made no reference to Abe's latest comments, but warned any attempt to contain China either amounted to a distorted view of China or "the rendering of an image of the 'Chinese menace' to achieve an ulterior political goal".
"I hope it's the former, because if it's the latter, not only is it futile, it is also extremely dangerous."
President Xi Jinping adopted a more conciliatory tone at a conference on diplomacy this week, saying good relations with neighbours were crucial to a stable foreign policy.
Additional reporting by Reuters