The dispute threatens to overshadow a conference of Asian and African leaders in Indonesia, which both Chinese President Hu Jintao and Japanese Prime Minister Junichiro Koizumi are due to attend.

UN Secretary-General Kofi Annan has appealed for a peacemaking session, and some observers say a summit is urgently needed.

"Both Japan and China need their leaders to sit down to talk about how to resume normal relations between the two countries," said Wang Xinsheng, a professor at Peking University's Institute of Japanese Studies.

China non-committal

But Beijing says it is still studying Tokyo's proposal for a one-on-one meeting. A Chinese Foreign Ministry official on Wednesday called for Japan to help create good conditions for a summit, but would not say what Beijing wanted.

Japan and China have been
urged to iron out differences

China might not be willing to reach a settlement yet, according to Dennis McNamara, a professor at Georgetown University in the US.

"China apparently wants to put pressure on Japan across multiple fronts. So it's not clear if China is ready to calm the waters."

Anti-Japanese protests erupted after Tokyo approved a new history textbook that critics say downplays wartime Japanese atrocities, including mass sex slavery and germ warfare.

But the downward spiral in relations also has been fuelled by disputes over Tokyo's effort to obtain a permanent UN Security Council seat and gas-drilling in disputed waters, as well as wider rivalry for regional dominance.

Undermining Japan

Some have suggested Beijing had allowed the protests to undermine Japan's UN campaign.

China is also angry at Koizumi's visits to the Yasukuni Shrine in Tokyo, which honours 2.5 million Japanese war dead, including executed war criminals.

"We are hopeful. After all, China and Japan are very big trade partners and our economies are interdependent"

Hatsuhisa Takashima,
Japanese foreign ministry spokesman

The Asian-African Summit begins on Friday, with 50 delegations commemorating the 1955 birth of the Non-Aligned Movement, giving ample time for Hu and Koizumi to meet on the sidelines.
 
Hatsuhisa Takashima, a Japanese Foreign Ministry spokesman, who is with Tokyo's delegation in Jakarta, said his government was awaiting China's reply.

"We are hopeful. After all, China and Japan are very big trade partners and our economies are interdependent," he said.

Koizumi caution

Koizumi, however, has warned that any meeting they have should not be simply an exchange of criticism.

Koizumi has been criticised for
honouring executed war criminals

A fence-mending mission to Beijing by Japanese Foreign Minister Nobutaka Machimura last weekend failed after China allowed more protests and rejected Tokyo's demand for an apology.
 
China says its security forces have done their best to prevent violence during three weekends of anti-Japanese demonstrations in cities throughout the country.

But police allowed rioters to break windows at the Japanese embassy in Beijing and a consulate in Shanghai.

Protesters in Shanghai also vandalised restaurants and overturned cars.

While political ties between the two sides have reached new lows, trade is stronger than ever. Last year, China became Japan's largest trading partner, displacing the United States.