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China in no mood to celebrate as island dispute continues

China's taking its ball and going home. Beijing announced over the weekend that it had called off celebrations marking 40 years of diplomatic ties with Japan amid a simmering territorial spat over the uninhabited Diaoyu Islands in the East China Sea.

"The Japanese government, regardless of China's firm opposition, insisted on 'buying' the Diaoyu Islands, which was illegal and severely damaged China-Japan relations and ruined the atmosphere of the 40th anniversary," state-run Xinhua reported on its website.

Tokyo purchased the natural gas-rich islands from a Japanese businessman earlier this month, sparking a week of sometimes violent protests in dozens of cities across China. An estimated 3,000 protesters took to the streets in the southern Guangzhou province, an economic powerhouse, on Sunday.

Asia's two biggest economies have bickered over the Tokyo-controlled rocky outcrops in the East China Sea since the early '70s — about the same time gas deposits were discovered in the area. Taiwan also claims the five-island, three-reef archipelago.

However, analysts say relations between China and Japan have sunk to their lowest level in years. Tensions have been heightened as China has flexed its military muscles and shown its economic might.

An editorial on Sunday in The People's Daily, a Communist Party mouthpiece, said "China will not compromise even with half steps" over the dispute. The paper went on to say that a "two-man act" featuring the Japanese government and right-wingers indicated Japan's "accelerated right-leaning tendency, toughened foreign policies and strained relations with its neighbors."

The paper didn't specify which relations. But aside from its recent testy claims to the entire South China Sea, where it has unresolved disputes with Taiwan, Vietnam, Philippines, Malaysia and Brunei, China also has ongoing conflicts with Myanmar, Bhutan, India, Pakistan and both Koreas.

The People's Daily said Japan's two-decade economic malaise has "rapidly changed the power balance" in the region and led Tokyo to "hold a hard line as a political magic weapon" in dealing with Beijing.

Amid the rising tensions, many in China have called for boycotts of Japanese companies. Economists have warned that an escalation between the world's second and third largest economies would hinder the global recovery.

On Friday, China's mammoth state-run National Tourism Administration canceled plans to attend one of the world's largest travel fairs in Tokyo and then issued a statement warning about safety risks to Chinese tourists traveling in Japan.

Angry mobs have attacked Japanese businesses, tourists and expats in China over the past week. Japanese nationals are reported to be scared to leave their homes.

"Their newspapers depict us as an invading army. This isn't World War II. Times have changed," said a Japanese factory manager in southern Shenzhen, who declined to be named. "The other thing they forget is they sent activists out to the islands first. It had been quiet up until they decided they were bored with fighting with Vietnam and the Philippines over the South China Sea."

In Taipei, hundreds of rowdy Taiwanese held an anti-Japan march of their own, a rare occurrence for the former Japanese colony and supposed ally. The United States is a strong backer of both Japan and Taiwan, but that hasn't stopped President Ma Ying-jeou from siding with the former enemy across the Taiwan Strait.

China and the Republic of China — Taiwan's official moniker since Chiang Kai-shek fled to the island after being routed by communist forces in the late '40s — are still technically at war. While Taipei officially announced the end of hostilities in 1991, Beijing has said it will use force if necessary to annex the island republic.

"It's embarrassing that we claim the islands as either part of ROC territory or belonging to independent Taiwan," said Kelly Liu, an office worker from Taipei. "We haven't ruled China since 1949, and Taiwan has never been officially independent, so how can we claim them?"

Taiwan sent up to 100 fishing boats to the islands on Monday.

State media added a little more spice to the volatile situation by reporting that China took delivery of its first aircraft carrier on Sunday. The northeastern city of Dalian hosted the handover ceremony of the 990-foot Varyag, a former Soviet carrier, which underwent a lengthy refit by a state-owned shipbuilder.

Calls to China's and Taiwan's foreign ministries went unanswered.