China said Monday diplomatic relations with Japan were at a three-decade low and blamed the dispute on Tokyo for refusing to face up to its militaristic past — prompting Japanese anger over China's lack of regret for violent anti-Japanese protests.

Simmering tensions between the Asian giants came to a boiling point this month when Japan approved a textbook that critics say whitewashes the country's World War II atrocities. China also opposes Japan's bid for a permanent seat on the U.N. Security Council (search).

"It shouldn't be us who should apologize," said Chinese Vice Foreign Minister Wu Dawei. "It is Japan who should apologize."

Anti-Japanese protests erupted in cities across China, with police in Shanghai this weekend standing by as thousands of rioters threw stones, eggs and plastic bottles at the Japanese Consulate, and damaged Japanese restaurants and cars. Some demonstrators shouted "Kill the Japanese!"

In Beijing, demonstrators last week smashed windows at the Japanese Embassy and attacked at least two Japanese students.

Japanese Prime Minister Junichiro Koizumi (search) and Chinese President Hu Jintao (search) were arranging for a possible meeting this weekend in Jakarta, Indonesia, where both will be attending the Asia-Africa summit.

But Koizumi, speaking to reporters in Tokyo, cautioned "if it's going to be the exchange of harsh words, it's better not to meet."

Japan said Monday that it was disappointed by China's lack of regret over the anti-Japanese demonstrations, and its failure to explain how the rallies escalated into riots that left windows smashed.

"No matter what the reasons are, violence is not acceptable," said Chief Cabinet Secretary Hiroyuki Hosoda told reporters in Tokyo. "We find it extremely regrettable" that there was no apology.

Fears have emerged about the possible impact the tensions could have on Asia's two largest economies, which are closely linked by trade and investment. Tokyo's benchmark stock index plunged 3.8 percent Monday, its biggest one-day drop in more than 11 months.

Wu, the Chinese vice minister, said at a press conference Monday that blame for the diplomatic row "falls on the Japanese side."

Wu said Japan had failed to handle "historical issues correctly" — an apparent reference to the new textbooks. Many Chinese believe Japan has never truly shown remorse for offenses committed during its invasion of China.

"There are serious difficulties in the China-Japan relationship and these difficulties are the most serious ones since 1972, when China and Japan normalized relations," Wu said.

Critics accused the history textbook authors of glossing over such crimes as the forced wartime prostitution of thousands of Asian women by the Japanese military, justifying Tokyo's military expansion and using wartime propaganda terminology, such as calling World War II the "Great Asia War."

Japanese textbooks require government approval before being used in public schools, but school districts are free to choose among approved works.

Meanwhile, the new U.S. ambassador to Japan on Monday backed Tokyo's bid to become a permanent U.N. Security Council member but also cited the importance of portraying history accurately.

Ambassador J. Thomas Schieffer, speaking at his first media briefing since taking up his post earlier this month, said Washington backed Japan's bid to be on the Security Council.

"We believe that Japan speaking with a louder voice in the world will actually increase the chances for peace and security," he said.

Schieffer also said it was not for the United States to tell Japan or China how to deal with their pasts, but added, "History is important, and the accurate portrayal of history is important" — in an apparent reference to the textbook dispute.

The Security Council currently has 15 members, 10 of which are chosen for two-year terms. The other five — Britain, China, France, Russia and the United States — are permanent and wield veto power over U.N. actions.

On Sunday, Japanese Foreign Minister Nobutaka Machimura (search) flew to Beijing to seek an apology of the anti-Japanese demonstrations and compensation for damage. His Chinese counterpart Li Zhaoxing (search) declined, saying China had not wronged the Japanese.

Li told Machimura that Tokyo must take "concrete action" to show it is facing up to history, the China Daily newspaper reported Monday on its Web site.

Machimura met State Councillor Tang Jiaxuan on Monday and the two discussed "the current state of bilateral relations, history, Taiwan and the textbook issues," said Japanese Foreign Ministry spokesman Hatsuhisa Takashima.

"The Chinese basic position is ... that those who try to bear more responsibility in the international scene should face history squarely," he said. "The Japanese position is that Japan is eligible to become a permanent member of the Security Council."