Beijing: China Tuesday warned that it reserves the right to take "further actions" over its maritime dispute with Japan even as fresh anti-Japan protests erupted across the country forcing top Japanese firms to remain padlocked.
"We pay close attention to the development of the (Diaoyu Islands) issue and we reserve the right to take further actions," China`s Defence Minister Liang Guanglie said during a joint press conference with visiting US Defence Secretary Leon Panetta.
On a day which marks the anniversary of Japanese occupation of parts of mainland China in 1931, thousands waving Chinese flags and chanting anti-Japan slogans gathered outside the Japanese mission here, some throwing eggs and plastic bottles at the heavily guarded building.
Both the Asian nations are fighting over the uninhabited group of islands in the East China Sea - called Diaoyu by China and Senkaku by Japan.
"Of course we still hope for peaceful and negotiated solution to this issue and we hope to work together and work well with Japanese government in handling the dispute," Liang said while acknowledging that the issue came up for discussion during the talks with Panetta.
Panetta, meanwhile, urged "calm and restraint by all sides" over the disputed islands.
"The US continues to be concerned about challenges to maritime security in East Asia," Panetta said.
Top Japanese company Honda Motor has closed all five of its China plants while Nissan shut two of its three factories. Canon and Panasonic have also temporarily closed some of their factories in the country following anti-Japan protests.
Calling for all the countries involved in the disputes to deal with disputes calmly, Panetta, who came here after talks with Japanese leaders in Tokyo said, "It is in no country`s interest for this situation to escalate into conflict that would undermine peace and stability in this very important region. This has been my consistent message throughout the week."
But the Diaoyu islands issue continued to dominate in China as more intensified protests were witnessed in Beijing and other cities with thousands taking part in the demonstrations as China observed 81st anniversary of Japanese invasion of China.
Most of the roads in the diplomatic district here where the Indian Embassy too is located were closed as thousands marched before the Japanese Embassy hurling bottles, eggs and other materials.
What was started as a state sponsored protests few days ago gathered momentum as thousands, mostly youth and students lined up turning the protests into an emotional outburst against Japan.
Most striking feature of the protests was the demonstrators carrying pictures of Mao Zedong, who was relegated to history by the present leadership of the Communist Party of China by embracing wide spread economic reforms.
The party is just coming out of major political scandal in which disgraced Party leader Bo Xilai, who made open attempts to revive Mao rhetoric was purged after his wife was involved in the murder of a British businessman.
Significantly as this being a year of leadership change, there was no photographs of outgoing President Hu Jintao or the "incoming" leader and Vice President Xi Jinping, who is expected to take over as President after the Party Congress expected to be held in the next few year.
Much to the disquiet of the Party leadership, there were no pictures of Mao`s successor, Deng Xiaoping whose reform policies changed the face of China, making it`s the second largest economy in the world.
Observers here believe that the return of Mao`s pictures should trouble the leadership, even though the party may be happy over the turnout of people.
Chinese Foreign Ministry, meanwhile, said it lodged a protest with Japan over attempts by Japanese to throw smoke bombs in one of its Consulates in Japan as well as attempts by two Japanese rightwing activists to land on the islands.