A foreign policy white paper, released on Sunday, underlined China's determination to safeguard its territory as the row between China and Japan over the Diaoyu Islands continued to escalate.?

On Sunday, Japanese Prime Minister Naoto Kan again rejected China's demand for an apology and compensation for the illegal detention of a Chinese fishing boat captain.

In a sign of growing tension, a Japanese man was arrested in Nagasaki on Sunday after he threw a smoke flare into the grounds of the Chinese consulate general, Kyodo news agency said. No one was injured.

Kan's rejection followed Foreign Ministry spokeswoman Jiang Yu insisting on Saturday that Japan apologize and offer compensation for its seizure of the Chinese trawler.

Experts said the Democratic Party of Japan's (DPJ) handling of the incident had been a typical strategic misjudgment and had caused irreparable damage to bilateral ties.

On Sept 7, two Japan Coast Guard patrol ships and a Chinese trawler collided in waters off China's Diaoyu Islands. Japanese authorities freed the 14 fishermen and the boat on Sept 13, but illegally detained the captain until Friday after China's repeated demands for his release and warnings of "strong countermeasures".

According to Liu Jiangyong, a senior scholar of Japan studies at Tsinghua University, the reason why the Japanese made such a mess of this case was partly because of the new administration's lack of experience. On top of this, some Japanese politicians want to play the "China threat" card to pave the way for an anti-China defense blueprint later this year.

Japan, however, encountered a China that refused to compromise on its territorial integrity.

China reiterated in its 2010 foreign policy white paper that territorial waters were part of China's territorial integrity, sovereignty and development.

Japan's move was a serious violation of, and a brazen challenge to, China's sovereignty over the Diaoyu Islands and their adjacent islets which have been an integral part of China since ancient times, said Chinese diplomats and experts.

"The Diaoyu Islands belong to China both historically and geographically," said Zhou Yongsheng, a professor of Japan studies at China Foreign Affairs University.

According to historical records, China discovered the Diaoyu Islands and held them as early as the Ming Dynasty (1368-1644), hundreds of years before the Japanese tried to claim them, Zhou said, adding that the islands are on an extension of China's continental shelf.

"Actually, the international community also supported China's stance. According to the Cairo Declaration in 1943, Japan had to return all the islands that it invaded back to China", and this affirmed China's existing sovereignty over the Diaoyu Islands, Zhou added.

In a joint declaration signed with Japan on the normalization of diplomatic relations on Sept 29, 1972, Japan went on record as saying that it fully understands and respects China's position and will continue to abide by Article 8 of the Potsdam Declaration in 1945, which states: "The terms of the Cairo Declaration shall be carried out and Japanese sovereignty shall be limited to the islands of Honshu, Hokkaido, Kyushu, Shikoku and such minor islands as we determine."

Wu Jinan, a researcher on Japan studies with the Shanghai Institute for International Studies, described the DPJ's conduct in this dispute as "opening a Pandora's box".

"Naoto Kan and the Japanese government made the wrong decision to detain the Chinese captain at the very beginning," Wu noted. "They intended to show 'toughness on China' to their people but then they couldn't handle the situation."

Wu noted even some Japanese experts like Kiyoshi Inoue, late professor of modern history at Kyoto University, acknowledged that the Diaoyu Islands were China's territory.

Wu said the dispute had damaged bilateral trust, trade and economic ties and friendship, which would be difficult to restore.