Tokyo: Incoming Japanese prime minister Shinzo Abe came out fighting Monday after his sweeping election victory, saying there can be no compromise on the sovereignty of islands at the centre of a dispute with China.
China reacted with alarm to Abe's victory, after his conservative Liberal Democratic Party crushed opponents in national polls and he immediately restated Tokyo's claims.
"The Senkaku islands are Japan's inherent territory," Abe told a press conference, referring to an archipelago Beijing calls the Diaoyus.
"Japan owns and controls the islands... Under international law. There is no room for negotiation on this point."
Beijing declared itself ready to work with Japan on "further development of stable relations" but expressed alarm at where Abe was taking Japan.
"We are highly concerned about which direction Japan will take," foreign ministry spokeswoman Hua Chunying said at a regular briefing.
"The current task is now to properly handle the current issue" of the territorial dispute, she added.
At home, Abe's large electoral margin boosted hopes for the country's problem-plagued economy, with investors pushing stocks up as the painfully high yen eased.
The one-time premier has vowed to put the moribund economy back on track after years of deflation, made worse by a soaring currency that has squeezed exporters.
Topping his agenda was a promise to pressure the Bank of Japan into more aggressive easing policies aimed at kick-starting growth as the world's third-largest economy slips into recession.
All eyes will be on the bank's policy meeting this week to see whether central bankers move in line with Abe's wishes.
Investors are increasingly betting on some action, with the yen tumbling against the dollar and euro today while Tokyo's Nikkei 225 stock index surged 0.94 percent by the close.
Voters yesterday dumped Prime Minister Yoshihiko Noda three years after his Democratic Party of Japan (DPJ) promised a change from more than half a century of almost unbroken LDP rule. The result cost Noda his party leadership.
The rout was completed by news that the LDP and its junior coalition party New Komeito secured a large enough majority in the lower house to overrule the upper chamber.