China’s premier threatened action against Japan if Tokyo does not immediately release a ship captain detained in his first comments amid a growing fight over disputed islands.

Wen Jiabao’s remarks on Tuesday night in New York were the first by a top Chinese leader on the issue that has led Beijing to suspend ministerial—level contacts with Tokyo. China also has said Mr. Wen would not meet with Japanese Prime Minister Naoto Kan during U.N. meetings in New York this week.

In comments carried on the website of China’s Foreign Ministry, Mr. Wen laid the blame for the dispute entirely at Japan’s door.

Tokyo “bears full responsibility for the situation, and it will bear all consequences,” he said to a gathering of overseas Chinese.

China—Japan relations are at their worst in half a decade, after Japan arrested the Chinese captain of a fishing boat that collided two weeks ago with Japanese coast guard vessels near islands in the East China Sea claimed by both nations. Japan extended his detention on Sunday, and China responded by suspending contacts.

The dispute over the islands, known as Senkaku by Japan and Diaoyu or Diaoyutai in Chinese, comes as an increasingly confident China, its economy booming and military expanding, asserts its presence in the region.

A Japanese government spokesman made a conciliatory gesture on Wednesday morning, but it was not clear if he was aware of Mr. Wen’s comments at the time.

“If possible, it would be good to quickly hold high—level talks, including broad, strategic discussions,” Japanese Chief Cabinet Secretary Yoshito Sengoku told reporters, saying that the countries should continue to strengthen their ties despite the dispute.

The telephone at China’s Foreign Ministry rang unanswered on Wednesday, a national holiday in China.

On Tuesday, a Chinese Foreign Ministry spokeswoman Jiang Yu explained that Mr. Wen would not be meeting Japan’s Kan in New York because “The atmosphere is obviously not suitable for such a meeting.”

Anti—Japanese protests have already flared in numerous locations around China, and the dispute has spilled into cultural ties. Beijing abruptly cancelling invitations to 1,000 Japanese youth to the Shanghai expo and the Japanese pop group SMAP has called off a concert in Shanghai.

Also, activists from Hong Kong, mainland China and Taiwan have tried to sail private boats to the islands in support of the territorial claims, though most of those plans were thwarted by official pressure.

Seven activists from the southern Chinese territory of Hong Kong set sail for the islands on Wednesday in a fishing vessel slightly larger than a private yacht. They were followed by a marine police boat but weren’t immediately stopped.

Hong Kong’s Marine Department on Tuesday sent a letter to the owner of the fishing boat banning it from venturing beyond Hong Kong waters on the suspicion that it may take a non—fishing trip, department spokesman Victor Ma said. If the order is defied, officials will take “appropriate action,” Mr. Ma said.

The growing dispute faces a test on September 29, the deadline by which Japanese prosecutors must decide whether to charge the Chinese captain. The 14 crew members and boat have been returned.

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