Chinese Premier Wen Jiabao is calling for the immediate and unconditional release of a Chinese captain, whose trawler collided with two Japanese coast guard ships near disputed islands in the East China Sea.
The man is being held by Japanese authorities, who accuse the captain of deliberately colliding with the coast guard vessels.
In the first comments by a senior Chinese leader on the issue, Wen told a meeting of Chinese Americans in New York that if Japan "acts willfully", China will take further action, warning Japan to be prepared for "severe consequences".
Japan responded by saying further dialogue was needed.