Chinese Foreign Minister Yang Jiechi on Thursday said the lower-level delegations that China sent to Tokyo for the annual meetings of the International Monetary Fund and World Bank were‘completely appropriate', given current tense China-Japan relations over the Diaoyu Islands territorial row.

Yang made the remarks while meeting with German Foreign Minister Guido Westerwelle on the one-month anniversary of a major diplomatic standoff between Asia's largest economic powers. Japan on Sept 11 finalized an illegal 'purchase' of the islands, which have belonged to China for centuries.

Observers have warned that the territorial dispute's growing effect on bilateral trade and Japan's domestic economy will not be reversed unless Tokyo takes necessary steps to correct its mistake. IMF Chief Christine Lagarde said on Thursday that China will 'lose out' by not sending its top two finance officials to the global economic talks this week. She also called on Beijing and Tokyo to settle the row quickly, as 'countries in this region are very important for the global economy'.

Yi Gang, deputy governor of the People's Bank of China, will deliver a speech on Sunday in place of bank Governor Zhou Xiaochuan. The Chinese delegation will be led by Zhu Guangyao, vice-minister of finance, suggesting that Finance Minister Xie Xuren will also miss the conference.

The no-shows of some of China's financial chiefs is a muted protest against Japan, Japan's Kyodo News Agency said.

Jin Baisong, a researcher with the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, said Japan is using the platform of the IMF and World Bank annual meetings to play up a scenario of a potential economic crisis if the two economies resort to retaliation and trade wars.

Such a scenario is unlikely, however, he said.

'The Diaoyu Islands dispute will hardly lead to an overblown global crisis, as Beijing has not ever brought out any formal retaliatory measures, and Chinese consumers' boycott against Japanese products is just natural and spontaneous,' Jin said.

Also on Thursday, Foreign Ministry spokesman Hong Lei refuted Japanese media reports that goods exported to China from Japanese companies were 'delayed' during customs clearance. 'We have noticed the reports, which according to relevant departments, were inconsistent with the facts,' Hong told a daily news conference.

Chinese customs authorities have been clearing the goods 'in accordance with due process' and normal regular inspections, the spokesman said.

Meanwhile, prominent figures and observers in Japan said Japanese Prime Minister Yoshihiko Noda, facing both bitter spats with neighbors and lasting poor public support, has a 'shrinking chance' of winning his upcoming re-election bid.

Japan's leading newspaper, Sankei Shimbun, on Thursday called Noda's decision to 'nationalize' the Diaoyu Islands a 'miscalculation'.

And Mainichi Shimbun, another leading paper in the country, regarded Chinese government vessels' recent continued patrols in the waters off the islands as 'a constant move for protest'.

Hiromasa Yonekura, chairman of the Japan Business Federation, earlier this week blasted Noda for the frayed ties with China, which have adversely affected the domestic economy, and he called for an early dissolution of the lower house to kick off the general election.

Yonekura, a powerful economic figure in the country, also told Shinzo Abe, leader of Japan's main opposition Liberal Democratic Party and former prime minister, that he hopes the LDP will repair China-Japan ties.

Beijing on Thursday rejected Japanese Foreign Minister Koichiro Gemba's recent remarks that denied Chinese sovereignty over the islands before the 1970s, and added that some materials that Gemba used to justify Japan's actions were fragmented and taken out of context.

In the presence of reporters on Wednesday, Gemba had resorted to a letter sent to a Japanese individual from the consulate of the then-Republic of China in Nagasaki in 1920, and a Chinese map published in 1960.

Scholars from both China and Japan have conducted comprehensive and rigorous studies about the history of Japan's stealing of the islands from China in the 1895 Sino-Japanese war.

Qu Xing, president of the China Institute of International Studies, said the maps Gemba mentioned were based on sources and materials from publishing organizations controlled by Japan during its invasion of China in the 1930s and 1940s, and most of Gemba's so-called proof just reflects Japan's militarist past.

Xinhua and AFP contributed to this story.

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