* China watching situation "very closely" - vice minister
* China could take "strong measures", vice minister says
* Japan bought disputed islands in September
China reserves the right to take strong countermeasures if Japan "creates incidents" in the waters around a group of disputed uninhabited islands in the East China Sea, a Chinese vice foreign minister said on Friday.
"We are watching very closely what action Japan might take regarding the Diaoyu islands and their adjacent waters," Zhang Zhijun said at an unusual late night news briefing. "The action that Japan might take will shape China's countermeasures."
Sino-Japanese relations took a dive after the Japanese government bought the islands, called Senkaku in Japan and Diaoyu in China, from a private Japanese owner in September, triggering violent protests and calls for boycotts of Japanese products across China.
"If Japan continues down its current wrong path and takes more erroneous actions and creates incidents regarding the Diaoyu Islands and challenges China, China will definitely take strong measures to respond to that," Zhang said.
"There is no lack of countermeasures China might take in response," he added.
"We have the confidence and the ability to uphold the country's sovereignty and territorial integrity. No amount of foreign threats or pressure will shake the resolve of the Chinese government and people."
Following Japan's purchase of the islands, China sent fishery patrol and marine surveillance vessels to waters near the islets, raising concern that confrontation with Japanese patrol ships could escalate into a broader conflict.
Senior Japanese and Chinese diplomats have met to discuss a dispute over East China Sea islets that both countries claim, the Japanese government said on Wednesday, underscoring willingness to talk despite a sharp deterioration in ties.
Chief Cabinet Secretary Osamu Fujimura confirmed talks between Tokyo and Beijing after domestic media reported that Japanese Vice Foreign Minister Chikao Kawai secretly met senior Chinese officials, including his counterpart, Zhang Zhijun, in Shanghai last week to discuss the dispute.
Zhang did not indicate that those talks had made any progress.
"In all levels of contact with the Japanese side, the Chinese side presented China's stern position and steely resolve to uphold China's sovereignty. We urge the Japanese side to give up its illusions and correct its mistakes," he said.
"Only this way can we return to normal relations."
China says the islands have been part of the country since ancient times. Taiwan also claims them.
The row with China, the world's second-largest economy and Japan's largest trading partner, has prompted the Bank of Japan to cut its outlook for economies in the region.