Beijing has sent two patrol ships to the area to assert its claim over the islands known as Diaoyu in China and Senkaku in Japan.
The Japanese government has announced its intention to buy three of the islands from their private owner.
Shen Dingli is the Executive Dean of the Institute of International Studies at Fudan University in Shanghai.
He accuses Japan of provoking Beijing by abandoning diplomacy and trying to nationalise Chinese territory.
Presenter: Richard Ewart
Speaker: Shen Dingli, Executive Dean of the Institute of International Studies, Fudan University
DINGLI: The island historically belonged to China and now Japan has claimed to nationalise the island by Japanese government, this inevitably evokes the current more serious dispute onset by Japanese government decision and we'll see how the two countries will further handle this issue.
EWART: Your belief is that China in general at least will continue to try and address these issues in a peaceful and diplomatic way, but plainly when you get these small-scale confrontations going on, there is always the risk perhaps that things could escalate to some degree out of control?
DINGLI: Yes I agree, but the source of the problem is that Japan has abandoned political and diplomatic means to deal with China. Therefore China has to respond. The best way is for Japan to reverse its current decision, to stop the nationalisation of the island.
EWART: You seem to be stressing the point that perhaps Japan has forced China's arm here, but plainly from the Japanese point of view that they're going to see it very differently, and they would argue that they have a territorial right to do what they're doing?
DINGLI: Yes and it's under dispute. China's proposal is that we should maintain status quo, neither side should take action to escalate the differences. Regrettably Japanese government has disrespected the Chinese proposal.
EWART: It does seem though that pressure is mounting on China, not obviously just in this situation, but there are there the other territorial disputes around the region with countries like the Philippines and Vietnam for example. How much longer do you think that China will carry on along this diplomatic road? How long do you think it will be before perhaps they act in a different way?
DINGLI: Well it is this, that as long as other countries would agree with China not to take efforts to escalate the differences, we will be happy to continue to use diplomatic means to deal with the dispute. But if another country will take effort to hurt the status quo, for instance the Philippines has been harassing Chinese fishermen, using its military ships in China's Huangyan Island, which the Philippines recognise as a part of China, until 15 years ago. Then China has to take efforts to stop the Philippines erroneous behaviour. So if the Philippines was to stop its irresponsible behaviour. China would continue to use diplomatic means to handle this. And if Vietnam, and actually Vietnam recognised during its anti-American war time, that Vietnam recognised Spratly and Paracels Islands belong to China. And they have lots of official statements and documents that document this recognition. But regrettably after 1975 they have taken efforts to occupy 29 island and islets in Spratlys. That violates their official statements prior to that time. Therefore its Vietnam's actions to invade Chinese territory, and it's very difficult for China to continue its diplomatic means to ask the Vietnamese military to quit. But we are still using diplomatic means to nowhere.
EWART: You've emphasised the point on more than one occasion that China wants to try and resolve these matters by diplomatic means and by maintaining the status quo. Why then do you think it is that the Chinese government doesn't want to negotiate multilaterally as has been offered by the ASEAN countries? That they prefer to work on a country-by-country basis?
DINGLI: Well it's this, if China and Australia were to have a territorial dispute, it would be bizarre to ask Fiji, to ask the Cambodians, to ask Ethiopia to participate.
EWART: What should happen in a situation where obviously a number of countries are involved in a dispute with China over a certain territory? Shouldn't those negotiations be conducted multilaterally?
DINGLI: Ten years ago China has talked to all ASEAN countries and concluded that a South China Sea declaration of conduct, to agree that we should settle all these disputes peacefully. And then China is willing to talk to all ASEAN countries at a future time to negotiate a South China Sea code of conduct. So we agree that we can collectively decide the formality of settlement, the principle of settlement. But we shouldn't cut a deal with any specific claimants, because all this detailed structure of dispute is different among themselves.
EWART: Also just like to ask if I may about how you think the situation may change when the leadership change takes place in China coming up very shortly? But first of all there's obviously growing concern about the whereabouts of the Premier in waiting as it were, Xi Jinping? He hasn't been seen in public for the last ten days. Do you have any theories as to why that has happened?
DINGLI: I'm not informed and if I'm informed I would not leak information if the government decided the information not be leaked. So we will not discuss about this.
EWART: Assuming that all is well and he takes over as planned, how would you see his attitude to the territorial disputes changing?
DINGLI: We have one ruling party and he has been the number two leader in the current government, and it's the same ruling party. So there must be a strong continuation of our foreign policy, and all successive governments of the same ruling party. So I don't predict a major departure of our foreign policy regarding all kinds of foreign policy that China is conducting today.