Prime Minister Shinzo Abe, in an interview published on Saturday, said Japan was ready to be more assertive towards China as Beijing threatened to strike back if provoked.
A top retired Chinese diplomat said any move by Tokyo to contain China could amount to an attempt to conceal ulterior motives in the region and prove to be "extremely dangerous."
And the defense ministry warned Japan not to underestimate China's resolve to take whatever measures were needed to protect itself.
Abe, interviewed by The Wall Street Journal,
said Japan should take the lead in guarding against what he said might be an attempt by China to use force to attain its diplomatic goals.
He said he had realized at recent meetings with South East Asian leaders that the region sought leadership from Tokyo in terms of security amid China's more forthright diplomacy.
"There are concerns that China is attempting to change the status quo by force, rather than by rule of law. But if China opts to take that path, then it won't be able to emerge peacefully," he told the newspaper.
"So it shouldn't take that path and many nations expect Japan to strongly express that view. And they hope that as a result, China will take responsible action in the international community."
China took issue with a Japanese media report saying Abe had approved a policy for Japan to shoot down foreign drones that ignore warnings to leave its airspace.
"Don't underestimate the Chinese army's resolute will and determination to protect China's territorial sovereignty," Defense Ministry spokesman Geng Yansheng said on the ministry's website.
"If Japan does resort to enforcement measures like shooting down aircraft, that is a serious provocation to us, an act of war.
"We will undertake decisive action to strike back, with every consequence borne by the side that caused the trouble," Geng added.
Relations have deteriorated sharply in the past year, with the main sticking point being conflicting claims to uninhabited islets in the East China Sea, known in Japan as the Senkaku islands and in China as Diaoyu. Ties have taken a further battering over visits by Japanese lawmakers this month to the Yasukuni shrine in Tokyo honoring both war dead and Japanese leaders convicted as war criminals.
China is also at odds with several South East Asian states contesting its claims to large swathes of the South China Sea.
Former Chinese foreign minister Tang Jiaxuan, addressing a forum in Beijing, said that Japan hoped to enlist the United Nations and the international community to curb China's actions in the region, according to media reports.
Tang made no reference to Abe's latest comments, but said any attempt to contain China either amounted to a distorted view of China or "the rendering of an image of the 'Chinese menace' to achieve an ulterior political goal."
"I hope it's the former, because if it's the latter, not only is it futile, it is also extremely dangerous."
President Xi Jinping adopted a more conciliatory tone at a conference on diplomacy this week, saying good relations with neighbors were crucial to a stable foreign policy.
Abe took office last year for a rare second term and is seen as a hawkish nationalist with a conservative agenda that includes revising a post-war pacifist constitution drafted by the United States, strengthening Japan's defense posture and recasting wartime history with a less apologetic tone.