China warned Japan on Thursday that trade could be hurt by the flare-up in tension over a group of disputed islands that is fraying ties between Asia's two biggest economies, Reuters reported.
The latest warnings from China brought a call for restraint from Japan, which on Tuesday announced it had bought the disputed islands in the East China Sea from a private Japanese owner, an act Beijing called a violation of its sovereignty.
"With Japan's so-called purchase of the islands, it will be hard to avoid negative consequences for Sino-Japanese economic and trade ties," Chinese Vice Minister of Commerce Jiang Zengwei told a news briefing.
The islands were at the centre of a chill in 2010 after Japan arrested a Chinese trawler captain whose boat collided with Japanese Coast Guard vessels near the disputed area.
The United States this week urged both sides to tone down increasingly impassioned exchanges over the longstanding row.
China is Japan's largest trading partner. In 2011, their bilateral trade grew 14.3 percent in value to a record $345 billion.
Jiang hinted that his government saw nothing wrong with peaceful boycotts of Japanese goods. China is a major market for Japanese cars and electronics, and China's National Business Daily newspaper said that travel agents had reported cancelled bookings for tours to Japan.