The incident on Monday, where the flag was removed from the Japanese ambassador's car, was a discourteous act, Tang Jiaxuan, president of China-Japan Friendship Association, said at a forum on Wednesday.
"It was not an act of patriotism," said Tang, a former state councilor who also served as foreign minister from 1998 to 2003.
The forum marked the 40th anniversary of the normalization of ties.
Disputes over history and territory are challenges facing China-Japan relations, he said.
Japanese Ambassador Uichiro Niwa was returning to the embassy on Monday when his car was forced to stop by two other vehicles, the Japanese embassy said. A man jumped out of one of the vehicles and pulled the flag off the front of Niwa's car.
A suspect has been detained by Beijing police, Japan's Nippon Television said on Wednesday. But neither the Japanese embassy nor Beijing police confirmed the detention.
The Foreign Ministry said on Tuesday that an investigation had been launched into the case.
Problems have dogged relations this year, especially over the Diaoyu Islands, which have belonged to China for centuries.
Tang criticized some Japanese people and political forces for refusing to envisage a smoothly developing relationship. They are using the islands to stoke ill-feeling for their own political gains, he said.
"If they are allowed to have their way, the Diaoyu Islands dispute will be uncontrollable and lead to endless trouble," Tang warned.
The issue of the islands was an obstacle to the normalization of Sino-Japanese relations and the signing of the China-Japan Treaty of Peace and Friendship in 1978.
The then Chinese and Japanese governments agreed to address the issue in the future.
When Japanese Prime Minister Kakuei Tanaka met Chinese Premier Zhou Enlai on Sept 27, 1972, they agreed to avoid talking about the islands to pave the way for the normalization of ties that year. In 1978, Vice-Premier Deng Xiaoping proposed to "shelve the dispute and explore jointly" the resources, which led to the signing of the China-Japan Treaty of Peace and Friendship that year.
In 2008, diplomats reached an agreement in principle on the East China Sea issue. That marked a beginning of efforts to find a way to solve disputes. But disparities and contradictions still exist.
Niwa said at the forum that the two countries should maintain close communication to ensure that problems do not undermine the relationship.
The forum, organized by the Chinese Academy of Social Sciences, brought scholars from both countries together.
"Through a close exchange of views, we should ensure that problems do not affect the broader relationship," Niwa said.
Jiang Lifeng, former director of the academy's Institute of Japanese Studies, warned that regardless of the success or failure of plans by Tokyo Governor Shintaro Ishihara to purchase the islands from so-called private owners, and moves by the Japanese government to "nationalize" them, the Japanese people and the international community will be misled to believe that the Diaoyu Islands are part of Japan.
Shin Kawashima, associate professor of the Graduate School of Arts and Sciences at the University of Tokyo, said both countries need to focus on beneficial goals.
Japan's foreign minister on Tuesday labeled as "very regrettable" an incident in Beijing in which Japanese flag was ripped off a car carrying Japan's ambassador by a Chinese man, fanning yet another diplomatic spat. Full story
Relevant authorities are seriously investigating the report that the flag of the Japanese ambassador's vehicle was ripped off in Beijing, Foreign Ministry Spokesperson's office told Xinhua on Monday evening. Full story