In a move likely to further exacerbate tension between Tokyo and Beijing, Japan has announced it will begin granting concessions for test drilling for natural gas and oil in waters disputed with China.

As frustrations rise in Japan over recent Chinese statements and protests, the government has announced it will allow Japanese companies to begin exploring an underwater gas field in the East China Sea.

The field lies in waters both China and Japan claim and the announcement on drilling may worsen tensions between the two countries. Relations have turned bitter in the past week after Chinese crowds damaged Japanese diplomatic missions and businesses in protests over how two new Japanese textbooks refer to Japan's invasion of China in the last century.

Chief Cabinet Secretary Hiroyuki Hosoda on Wednesday said the timing of the announcement has no connection with any other bilateral issues. He says the timing is a coincidence and is an industrial issue, not a political one.

The Chinese are unlikely to see it that way.

Japan says its exclusive economic zone extends to the line midway between its coast and China. Beijing, however, claims its economic zone goes beyond that boundary, closer to Japan.

Japan's Trade Ministry last week notified the Chinese that it would likely allow Japanese drilling if Beijing continued to refuse Tokyo's requests for additional information on its gas projects in the same area. Japan also has asked China to halt its activities in the disputed area.

Beijing has refused to discuss the matter, and one Chinese official on Tuesday warned Tokyo not to award drilling rights, saying that doing so would "fundamentally change the issue."

The state-owned China National Offshore Oil Corporation plans to begin drilling in the area in August. The company says it expects to extract up to one billion cubic meters of natural gas annually from the field. Japan contends the activity could suck up gas from its territory.

Japan for four decades has held off granting exploration concessions in the East China Sea, wanting to avoid aggravating the territorial dispute.

The United States weighed in on the matter Tuesday, saying that is important for China and Japan to solve disputes peacefully. State Department spokesman Richard Boucher on Tuesday called the outbursts in China "very regrettable."

"China does have a responsibility to prevent violence against foreign missions in Beijing," said Mr. Boucher. "We think that it's very regrettable that this one did turn violent and was not under control."

Over the past several days leaders from China have blamed Japan for the worsening relations and demanded that Japan fully admit to and apologize for its invasion and abuses in the first half of the 20th century. Japanese leaders, on the other hand, insist that Beijing must protect Japanese citizens and property in China.