Anti-Japan protests in China
Protesters hold up Chinese national flags and banners as they walk past paramilitary policemen during a protest outside a Japanese consulate in Shanghai - Reuters

Thousands of Chinese people have taken to the streets in protest against Japan, following a recent dispute between the two countries surrounding the East China Sea islands.

Demonstrations have taken place in several Chinese cities, including Beijing, Shanghai, Chengdu and Guangzhou, following Japan's purchase of an uninhabited archipelago which is also claimed by China.

Protesters held slogans such as "Wipe out all Japanese dogs" and "The islands are ours. Kneel down bastards." One protestor, Wang Guoming, told reporters:

"I came here so our islands will not be invaded by Japan. We believe we need to declare war on them because the Japanese devils are too evil. Down with little Japan!"

The Japanese embassy in Beijing has suspended its operations, and several Japanese companies including Toyota, Panasonic and Mitsubishi have suspended their operations, fearing persecution.

Scores of Japanese residents now fear for their safety. One Japanese expatriate, Mutsuko Takebayashi, told Reuters:

"My family and my husband, who is currently in Japan on business, are worried about us being here. It's possible that Japanese companies will start evacuating families back home and if that happens it'll be too late to book tickets. That's why I'm going back today."

The protests took place on the 81st anniversary of Japan's occupation of China. To mark the occupation, the Shenyang government sounded a three-minute air raid siren, while several TV stations broadcast patriotic films.

Response from Tokyo

In response to the protests, Tokyo has urged the Chinese government to take all necessary steps to protect its citizens, and remind them of the important role Japanese companies play in China's economy.

Meanwhile US Secretary of Defence Leon Panetta has arrived in Beijing to hold diplomatic talks with Chinese counterparts.

Panetta, who visited Tokyo before heading to China, warned both sides that the current situation could escalate unless it is tackled.

He added that the US is not willing to take sides on the issue - China and Japan must both show restraint.