The move came as US Secretary of State Hillary Clinton urged dialogue over the arrest by Japan of a Chinese fisherman earlier this month, which sent relations between the neighbours into a tailspin.

Chinese premier Wen Jiabao on Tuesday threatened retaliation over Japan's "mistake" as Beijing ramped up the pressure on Tokyo.

In a short report on Thursday, the state-run Xinhua news agency said: "Four Japanese are being investigated for having entered a military zone without authorisation and illegally videotaped military targets in northern Heibei province."

Chinese state security authorities have "taken measures against the four people according to the law after receiving a report about their illegal activities," Xinhua said.

The report gave scant details, other than to name one of the four as Sada Takahashi.

Japanese news agency Jiji Press said contractor Fujita Corp. "had information that four of its employees had been detained by Chinese authorities".

The report, citing a spokesman, said the company had not been in touch with the four since "at least Wednesday".

The move will likely worsen the row between Tokyo and Beijing that erupted with the arrest of the Chinese trawlerman following a collision near islands claimed by both countries in the East China Sea.

Beijing has made repeated angry demands for his release, which Tokyo has rebuffed, saying he is subject to domestic law having deliberately rammed coast guard boats with his trawler.

In a meeting with Japanese Foreign Minister Seiji Maehara on the sidelines of the UN General Assembly in New York, Clinton said Washington wanted to see a negotiated settlement to the dispute, the worst between the two countries in a number of years.

Clinton sought to "encourage dialogue and (voiced) hope that the issue can be resolved soon", her spokesman Philip Crowley said, adding Japan-China ties "are vitally important to regional stability".

Crowley said Maehara told Clinton that his government was trying to resolve the dispute based on its legal process and international law.

"Our sense is that neither side wants to see this situation escalate to the point that has long-term regional impact," Crowley said.

He added: "We continue to encourage both sides to do everything to resolve it and certainly not to escalate it."

Wen weighed in on the dispute shortly after arriving in New York on Tuesday, threatening "further actions" if Japan does not release the trawler captain.

"I strongly urge the Japanese side to release the skipper immediately and unconditionally," he said.

"If Japan clings to its mistake, China will take further actions and the Japanese side shall bear all the consequences that arise," he said, urging Tokyo to "correct its mistakes to bring relations back on track".

Wen told the UN General Assembly Thursday his country would not threaten another nation but would not yield in disputes over its national interests.

Without mentioning the ongoing dispute, he said: "When it comes to sovereignty, national unity and territorial integrity, China will not yield or compromise."

China on Thursday denied a report in the New York Times that it had blocked exports of rare earth minerals to Japan during the row.

Beijing has already suspended high-level contacts with Tokyo and called off several official visits.

Tokyo's ambassador has been called in for a dressing down by various officials in the Chinese foreign ministry on six occasions, once in the small hours of the morning.

The trawlerman, Zhan Qixiong, has been in custody since September 7 following the incident near a group of islands with rich fishing and mineral resources known as Senkaku by Japan and Diaoyu by China.

His detention has been extended until Wednesday, when, under Japanese law, he must be either indicted or released.

The dispute has caused anger in China, where resentment of Japan and its brutal occupation of parts of the country during the 1930s and 1940s still simmers.

At the weekend, small groups of anti-Japan demonstrators rallied in three Chinese cities, but the protests were brief and peaceful.

Sino-Japanese ties hit rock-bottom during the 2001-2006 premiership of conservative Junichiro Koizumi due to his annual visits to the Yasukuni shrine in Tokyo, which honours 2.5 million Japanese war dead, including war criminals.

Relations have gradually warmed as Koizumi's successors have refrained from visiting the shrine, seen by Japan's East Asian neighbours as a symbol of Tokyo's past imperialism.

earlier related report
Clinton urges dialogue to resolve China-Japan row
New York (AFP) Sept 23, 2010 - US Secretary of State Hillary Clinton urged Japan Thursday to pursue dialogue with China in a bid to resolve quickly a row over a Chinese trawler captain detained near islands claimed by both countries.

The United States also stressed the need to avoid an escalation of the row as Japanese media reported Clinton told Japanese Foreign Minister Seiji Maehara in New York that the islands are covered by the Japan-US security treaty.

Under the 1960 treaty, the United States is obliged to defend Japan against any attack on a territory under Tokyo's administration.

In meeting with Maehara, Clinton sought to "encourage dialogue and (voiced) hope that the issue can be resolved soon," her spokesman Philip Crowley said, adding that Japan-China ties "are vitally important to regional stability."

Maehara told the chief US diplomat that Tokyo is trying to resolve the row based on its legal process and international law, Crowley told reporters after the meeting on the sidelines of the UN General Assembly in New York.

"We are not mediating per se. We have not been asked to play a particular role," he said, adding that this is an an issue two "mature countries" like China and Japan are "fully capable of resolving."

"Our sense is that neither side wants to see this situation escalate to the point that has long-term regional impact," Crowley said.

He added: "We continue to encourage both sides to do everything to resolve it and certainly not to escalate it."

He said that the dispute also came up earlier this week in US-Chinese talks.

US President Barack Obama met Thursday in New York with Chinese Premier Wen Jiabao, who told the UN General Assembly his country would not threaten another nation but would not yield in disputes over its national interests.

"When it comes to sovereignty, national unity and territorial integrity, China will not yield or compromise," Wen said in a speech.

But Wen insisted that China would not seek hostilities.

He did not mention the islands dispute or other tensions in Asia.

Obama was also due to meet with Japanese Prime Minister Naoto Kan but Crowley said he could not predict whether the spat would come up in the high-level US talks with either country.

Maehara's press secretary Satoru Satoh told AFP late Wednesday that Japan wants to communicate with China but that no meetings are planned yet between Japanese and Chinese officials in New York.

Maehara told reporters after his meeting here that Clinton had acknowledged the Senkaku islands -- known as the Dadirectlyioyu islands by China -- were subject to the treaty, Kyodo News Agency reported from New York.

"According to the Japanese minister, Clinton said that the Senkakus... are subject to Article 5 of the bilateral security treaty, which authorizes the US to protect Japan in the event of an armed attack 'in the territories under the administration of Japan'," the report said.

The dispatch did not quote Maehara .

China's premier has threatened "further actions" if Japan does not release the trawler captain, who was detained September 7 by the Japanese coast guard near the islands in the East China Sea between Taiwan and Japan's Okinawa island.

Crowley said the United States takes no position on the sovereignty of the islands.

China has summoned Japan's ambassador five times, demanded the release of the boat's captain and scrapped talks on joint exploration of a gas field near the disputed islands.

China, meanwhile, Thursday denied a report that it had blocked exports to Japan of rare earth minerals to Japan, which are essential for making iPods, electric cars, missiles and a range of other products.

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