Chinese protesters shout slogans outside the Japanese Embassy in Beijing on Monday, Sept. 17, 2012. (AP Photo/Ng Han Guan)

(CNSNews.com) – Exchanging warnings but avoiding confrontations thus far, Chinese and Japanese ships have come within less than half a nautical mile of each other in an ongoing dispute over the sovereignty of contested islands.

Amid deepening tensions in a long-running saga over the uninhabited islands, known as Senkaku in Japan and Diaoyu in China, Defense Secretary Leon Panetta warned Sunday about the possibility of war between the two Asian countries.

“What we don't want is to have any kind of provocative behavior on the part of China or anybody else result in conflict,” he told reporters accompanying him on a trip that includes stops in Japan, China and New Zealand.

“My purpose will be to urge that they engage in the effort by the Asian nations to try to work out a format for resolving these issues,” he added, referring to a code of conduct developed by the Association of Southeast Asian Nations in a bid to manage unconnected territorial disputes between China and ASEAN members in the South China Sea.

Asked again about the concerns, Panetta said he was worried that “when these countries engage in provocations of one kind or another over these various islands, that it raises the possibility that a misjudgment on one side or the other could result in violence and could result in conflict, and that conflict would then, you know, have the potential of expanding.”

Defense Secretary Leon Panetta meets with his Japanese counterpart Satoshi Morimoto, in Tokyo on Monday, Sept. 17, 2012. (AP Photo/Shizuo Kambayashi)

“We’re going to face more of this, countries are searching for resources,” he added. “There’s going to be questions raised as to who has jurisdiction over these areas. There has got to be a peaceful way to resolve these issues.”

Any conflict between Japan and China could risk drawing in the United States.

Although the U.S. position is that is does not take sides in the territorial dispute the Obama administration, like the Bush administration before it, has confirmed that the islands fall within the scope of article five of the 1960 U.S.-Japan Treaty of Mutual Cooperation and Security – an appraisal rejected by Beijing.

The treaty’s article five states: “Each Party recognizes that an armed attack against either Party in the territories under the administration of Japan would be dangerous to its own peace and safety and declares that it would act to meet the common danger in accordance with its constitutional provisions and processes.”

The Senkaku/Diaoyu islands, located about halfway between the Chinese mainland and Japan’s southernmost island of Okinawa, have been under disputed Japanese control since the late 19th century.

Earlier this month the Japanese government signed an agreement to buy three of the five islands from their owner, a businessman who has rented them to the government since 2002. China described the move as illegal and in response made a submission to the United Nations defining its territorial claims in the vicinity.

China late last week deployed at least six surveillance ships to waters around the islands, to begin what the country’s China Marine Surveillance (CMS) division describes as “patrol and law enforcement” operations.

Beijing’s official Xinhua news agency, citing a reporter onboard one of the vessels, said three Japanese coastguard ships and three helicopters monitored the group of Chinese ships and that the two sides had exchanged warnings by radio, each informing the other they were violating sovereignty. The ships had come within less than half a nautical mile (less than 3,000 feet) of each other, it said.

Chinese authorities, who usually do not tolerate large public protests, have permitted anti-Japan rallies in dozens of cities across China, and in some cases Japanese cars and property have been attacked and damaged.

Chinese media noted that weekend demonstrations by tens of thousands of protestors were described by observers as the biggest targeting Japan since relations between the two former enemies were normalized in 1972.

Official media outlets appear to be seeking a balance between firing up emotions with impassioned criticism of Japanese policies, and cautioning against overreaction.

A People’s Daily article Saturday, for example, used emotive terms to describe Japanese officials’ behavior, warning they were “digging their own graves and will ultimately pay a heavy price.”

On Sunday an article in the same publication – a Communist Party mouthpiece – said that citizens’ public expression of “patriotism” was a “natural reaction,” but also cautioned against law-breaking. “Wisdom is needed in the expression of patriotism,” it said.

Global Times, also Communist Party-affiliated, on Monday rejected criticism that Beijing was allowing protests to turn ugly.

“There is no reason to suspect that the government is turning a blind eye to the violence seen over the weekend,” it said. “This is simply the view of those who make a habit of criticizing the government.”

The protests are expected to pick up on Tuesday, which is marked in China in memory of Japan’s occupation of parts of its territory last century. (The ‘Manchurian incident” on September 18, 1931 was an orchestrated act of sabotage, viewed as a pretext for Imperial Japan’s invasion of the region, which was occupied until the end of World War II.)

Panetta arrived in Tokyo on Sunday, and on Monday began talks with his Japanese counterpart, Satoshi Morimoto.