KATE ARNOTT, REPORTER: The expansion of the Chinese Navy has been rapid and extensive. And it's causing deep concern in Japan, which is at loggerheads with China over a group of disputed islands in the East China Sea.
Tensions have risen yet again, with reports from Japan that this Chinese warship locked a weapons targeting radar on to a Japanese destroyer near the islands at the beginning of February.
SHINZO ABE, JAPANESE PRIME MINISTER (translation): At a time when there were hopeful signs of China and Japan resuming talks, it is extremely regrettable that China has carried out a one-sided provocative action towards Japan.
KATE ARNOTT: The Japanese Defence Ministry says there was a similar incident earlier in January in which a radar from another Chinese warship was pointed at one of its helicopters.
ITSUNORI ONODERA, JAPNESE DEFENCE MINISTER (translation): It's extremely abnormal that this kind of fire control radar or radar that's been used for firing weapons is being used. Japan recognises this as an incident that could lead to a dangerous situation if a wrong step is taken.
KATE ARNOTT: For its part, China says it's done nothing out of the ordinary.
HUA CHUNYING, CHINESE FOREIGN MINISTRY SPOKESWOMAN (translation): China's position is clear and consistent. The islands belong to China on a historical and legal basis. Chinese ships were enforcing the law and it is normal activity.
KATE ARNOTT: And the radar targeting has heightened fears a military conflict between China and Japan that could draw in the United States.
VICTORIA NULAND, US STATE DEPARTMENT SPOKESWOMAN: With regard to the reports of this particular lock on incident, actions such as this escalate tensions and increase the risk of an incident or a miscalculation and they could undermine peace, state and economic growth in this region, so we are concerned about it.
KATE ARNOTT: The issue is a thorny one for the new secretary of state John Kerry. The US doesn't want a war in Asia but it can't afford to let things get out of control and put its specific strategy at risk.
With that in mind, John Kerry has already made a phone call to China's foreign minister.
VICTORIA NULAND: Beyond saying that regional security issues as a whole came up, I am not going to get into any further detail of the phone conversation.
KATE ARNOTT: The territorial dispute is also complicated by new leaders in Japan and China, trying to establish their security credibility.
Japan's prime minister, Shinzo Abe, has long advocated a tougher stance against China and since his landslide election win in September he's promised to build up Japan's military, especially in the East China Sea.
SHINZO ABE (translation): The situation surrounding Japan is becoming increasingly severe. We will do our best to enhance proper promotion and management of border islands and strengthen our guard.
Here we pledge to firmly protect people's lives and our Territories, water and air space.
KATE ARNOTT: For China's president, Xi Jinping, it's a delicate balancing act.
In her report titled 'China's foreign policy dilemna', the Lowy Institutes Linda Jakobson says the president's foremost concern is to focus on immense domestic problems an ensure China's economic growth is not put at risk by regional instability. But at the same time she says he is under pressure from a fiercely nationalistic public.
(Footage of people protesting in China)
LINDA JAKOBSON, LOWY INSTITUTE FOR INTERNATIONAL POLICY, SYDNEY: There are many sectors of society and there are many parts of the elite who would like Xi to make a much more forceful stance when it comes to China's international relations in general, but especially with the relationship with Japan
KATE ARNOTT: And Linda Jakobson says emotionally charged national sentiment on both sides makes it very difficult for the leaders of China or Japan to find a solution in the near future.
LINDA JAKOBSON : How hands on Xi Jinping at the moment is, is not known. We do know, however, that after the Japanese government purchased a few of the disputed islands in September of last year, Xi Jinping was made head of the Diaoyu Island Crisis Taskforce. And so certainly he is involved in discussions about how China is going to move forward.
Precisely the level of detail in which Xi Jinping would be involved, that is something that we do not know.