Prime Minister Yoshihiko Noda's administration was left with little choice but to buy the rocky outcroppings in the East China Sea after the stridently nationalistic governor of Tokyo, Shintaro Ishihara, announced a plan in April to buy the islands from their Japanese owners and then develop them to ensure that they would never be sold to China.
The prospect of construction on the islands—and boatloads of activists landing on their shores—would be sure to upset China, so the central government stepped in Tuesday to buy the islands for 2.05 billion yen ($26 million). It has no plans to develop them.
Beijing's response was swift and strong, calling the purchase "null and void" and threatening "serious consequences." China sent two patrol ships to waters near the islands, according to the official Xinhua News Agency, although Japanese coast guard officials said no Chinese ships had been sighted within 24 miles (38 kilometers) of the islands as of Wednesday afternoon.
"There's no doubt that the purchase was caused by Ishihara's initiative," said Koichi Nakano, a political science professor at Sophia University in Tokyo. "It's a severe loss of face for the Chinese. ... They will probably feel the need to do
In Beijing, Luo Zhaohui, director-general of Asian affairs at China's Foreign Ministry, told a Japanese diplomat on Wednesday that China will not tolerate any unilateral act by Japan and asked Japan to immediately revoke its purchase of the islands, known as Senkaku in Japan and Diaoyu in China.
Analysts said that while prospects for military conflict remained remote, tensions between the two Asian giants would likely remain high for some time. In a move meant to assert its sovereignty, China announced coordinates marking areas off the Islands that it considers its territory.
China might also cancel some Japan-related events. In 2010, it stopped exports to Japan of rare earth metals that are used in high-tech manufacturing after Tokyo arrested a fishing boat captain whose trawler collided with two Japanese patrol boats off the disputed islands.
Still, China doesn't want too much trouble while it undergoes a major leadership transition this fall, and both nations presumably don't want to damage their vital economic relationship.
"If I were Chinese leadership, I wouldn't want any kind of trouble before such a delicate moment," said Tsuneo Watanabe, a senior fellow at the Tokyo Foundation, a think tank.
In Beijing on Wednesday, dozens of people at a time staged angry protests and shouted slogans in front of the Japanese Embassy. One group carrying a big Chinese flag chanted "Fight the Japanese" as they marched by the embassy's gate.
Beijing travel agencies reported that companies and individuals were canceling trips to Japan.
"We just got an oral notice minutes ago that we should suggest or persuade our customers not to go to Japan at this stage," said a man surnamed Wang at China Travel Service. "The order is probably from the tourist authorities."
Users of the Chinese Twitter-like site Sina Weibo were calling for a boycott of Japanese-made goods.
"The government should be the first one not to buy Japanese goods, all the people should boycott Japanese goods, change our technological dependence from Japan to Korea and Germany," Zhou Tianyong, a senior researcher at the Communist Party's training institute, wrote on Weibo.
The annual Shanghai marathon, scheduled for December, could drop the name of its Japanese sponsor from its title because of the dispute, the Shanghai Sports Administration said.
Japan has claimed the islands since 1895. The U.S. took jurisdiction after World War II and turned them over to Japan in 1972. But Beijing sees the purchase as an affront to its claims and its past calls for negotiations.
Gui Yongtao, a professor at the School of International Studies at Peking University, said it was unlikely that either side would back down easily.
"The situation could be frozen for a period of time with both sides trying to avoid taking more radical actions," he said.
Japan's Nikkei business newspaper defended the government's move in an editorial Wednesday, saying it actually would help Japan-China relations.
"If the government didn't purchase them, the Tokyo metropolitan government was to own them instead under Gov. Ishihara, who is known as a China hawk. Possession and control by the government serves better for broader Japan-China relations. The government should emphasize this benefit to China," it said.
Associated Press writers Louise Watt and Didi Tang and researchers Yu Bing and Fu Ting in Beijing, and Mari Yamaguchi and Eric Talmadge in Tokyo contributed to this report.