The neighbours, the world's second- and third-biggest oil consumers, have been at odds over China's exploration for natural gas near an area Japan claims as its exclusive economic zone in just one of many disputes straining ties between the two.
Tokyo on 1 April reiterated its demand that China halt the exploration and provide data on its gas-development projects in the area. It gave Beijing about a week to provide a "sincere" response before Japan would start awarding gas-exploration rights.
The Japanese move to process gas-exploration rights comes at a time when ties between the two are at rock-bottom in a dispute over Japan's wartime past.
Japan has repeatedly protested against Chinese exploration of the fields, saying the activities extend into Tokyo's exclusive economic zone. But Beijing says its surveys are within its zone and has refused to halt them or share results.
Tokyo has threatened to let Japanese companies begin test-drilling near an offshore Chinese drilling platform if Beijing did not respond.
Several Japanese firms have bid
for exploration of the gas fields
Several Japanese companies have applied to explore the gas fields since the 1960s, but Tokyo had delayed approving them because it did not want to aggravate the dispute.
Junichi Uchikawa, an official at the Trade Ministry's Agency for Natural Resources and Energy, said the government would grant approval for exploration in 2-3 months. He refused to identify the applicants.
The spat comes as Tokyo's approval of a history textbook reportedly playing down Japanese military abuses during World War II prompted violent protests across Chinese cities last week.
China has ignored Japan's demands for an apology and compensation after demonstrators recently stoned the Japanese embassy in Beijing.
Beijing also hinted strongly that it would block Japan's bid for a permanent seat on the UN Security Council, with Prime Minister Wen Jiabao saying Tokyo must face up to its wartime atrocities before aspiring to a bigger global role.