TOKYO -- Japan has agreed to buy a group of islands at the center of a territorial dispute with China, a government official said on Monday, prompting an angry rebuke from Beijing a day after Chinese President Hu Jintao warned against such an "illegal" move.
Japan aimed to nationalize the uninhabited islands in the East China Sea as soon as possible to control them in a peaceful and stable manner, Chief Cabinet Secretary Osamu Fujimura said.
The islands, called Senkaku in Japan and Diaoyu in China, are near rich fishing grounds and potentially huge maritime gas fields and have been at the heart of long-running territorial disputes between the world's second and third-largest economies.
Japan’s government held a cabinet meeting on Monday and officially endorsed a plan to buy the islands from their private owner, despite denunciations from China, for a reported sum of $26 million.
Tension flared anew last month when Japan detained a group of Chinese activists who landed on the islands. But the row may now be having an economic impact, intensifying from merely an exchange of rhetoric, with a Chinese official saying Japanese car sales may have been hit in the world's biggest auto market.
"This is just the ownership of land, which is part of Japan's territory, moving from one (private) owner to the state, and should not cause any problem with other countries," Fujimura said.
"Having said that, we don't want the Senkaku issue to affect overall Sino-Japanese relations. Because it is important to avoid misunderstanding and unforeseen development, we have been closely communicating with China through diplomatic channels to this day."
But China was firm in its opposition to what it saw as a "political trend".
"This is a serious infringement of China's sovereignty and has seriously hurt the feelings of 1.3 billion Chinese..." the Foreign Ministry said in a statement. "The Chinese government and people express their resolute opposition and protest strongly."
Chinese Foreign Minister Yang Jiechi called in Japanese Ambassador Uichiro Niwa to lodge a strong protest, while state-run Xinhua news agency cited Premier Wen Jiabao as saying China would "never yield an inch" of territory.
The Japanese otter was declared extinct today by the Japanese government after not being spotted for over 30 years. NBCNews.com's Richard Lui reports.
Japanese govt spokesman Osamu Fujimura stressed that the purpose of the purchase is for Japan to maintain its peaceful and stable control of the islands, suggesting that no new structures will be built, and access to the islands will remain restricted.
Reuters contributed to this report.