|AFP file - Japan's troops are seen during military exercises.|
TOKYO (AFP) – Japan is considering stationing troops near islands at the centre of a row with China, a news report said Wednesday, but Beijing's move to ease mineral exports raised hopes for an easing of friction.
Asia's two powerhouses have been embroiled for over three weeks in their worst diplomatic spat in years, triggered by Japan's arrest of a Chinese captain after a tense maritime incident near the islets in the East China Sea.
Although Japan has since freed the skipper, a war of words has raged on between the traditional rivals, with China pursuing a multi-faceted offensive of official diplomatic protests and unofficial economic measures.
Amid the heightened tensions, Japan's defence ministry has asked for a budget to study a plan to station ground troops in Japan's southwestern islands near the disputed island chain, the Nikkei business daily reported.
The only Japanese troops now permanently stationed in the far south are on the region's main island of Okinawa, also the main base for US troops in Japan, but the plan calls for troops on the remote Yonaguni island, close to Taiwan.
China, which has been increasingly assertive about various other maritime territorial claims, insists that the islands, called Senkaku in Japan and Diaoyu in China, have been part of its territory since ancient times.
Amid the tensions, Beijing and Tokyo have announced no plans so far for a meeting between Japan's Prime Minister Naoto Kan and his Chinese counterpart Wen Jiabao at an Asia-Europe summit in Brussels next week.
"We are not in a win-win situation at all," Japan's top government spokesman, Chief Cabinet Secretary Yoshito Sengoku, told a press conference.
"The situation has been heading in a negative direction. I am guessing that (China) is starting to make an effort to bring it back to neutral."
China had appeared to soften its tone on Tuesday.
"China highly values China-Japan relations," said foreign ministry spokeswoman Jiang Yu. "But safeguarding bilateral relations requires the two sides to meet halfway and requires Japan to take candid and practical actions."
"Japan should take concrete steps to eliminate the negative impact of this incident on bilateral relations," Jiang told reporters.
In a sign that tensions may be gradually easing between the increasingly interdependent regional economic powerhouses, Japanese traders reported Wednesday that China had dropped a de-facto ban on crucial mineral exports.
One trader, Katsuyuki Matsuo, chairman of Kan Material which specialises in the rare earth trade with China, told AFP that Chinese customs had resumed procedures for exports on Tuesday, although he added that "inspections on all Japan-bound cargo are still being tougher than usual".
Beijing has denied claims it blocked the shipments of rare earths, a market in which it has a virtual global monopoly and which Japan's high tech firms rely on for making everything from wind turbines to hybrid cars.
Japan's economy minister Banri Kaieda said that "in reality there is an export ban on rare earths," the Financial Times reported Wednesday.
"It's important that China stop this extremely abnormal action at the earliest possible time," he was quoted as saying.
The wider dispute has raised tensions in both countries, with anti-Japanese bloggers and street protesters weighing in on the row in China, which is also still holding four Japanese nationals for allegedly filiming a military site.
In Japan, protests against China -- and against the centre-left Kan government for releasing the Chinese captain -- have been led by conservative former premier Shinzo Abe and nationalist Tokyo governor Shintaro Ishihara.
"We are standing at a watershed where our ability to defend the Japanese people and this nation itself is being tested," according a reported statement issued by about 100 conservative politicians led by Abe.
Right-wing nationalist groups also plan a protest in Tokyo Saturday.
Japanese police also said they had arrested a man on Tuesday for allegedly hurling a flare at the Chinese consulate in the western city of Fukuoka. No-one was injured in the incident.