Relations, which have often been testy, have soured dramatically over the last 12 months, with frequent confrontations between official ships from Asia's largest powers.
On Tuesday, Tokyo said it had not ruled out stationing officials there, drawing a response from Beijing, which warned Japan "must be prepared to bear the consequences of this provocation".
"We are on high alert as today marks the first anniversary of the nationalisation of the Senkaku islands," coastguard official Yuma Miyako told AFP, referring to the Tokyo-controlled islands claimed by China as the Diaoyus.
Since last September, official Chinese vessels have regularly traversed the waters -- China said Tuesday it had carried out 59 "patrols" -- each time being warned off by their Japanese opposite number, and the two nations' militaries have shadow-boxed in international waters and international skies.
Tokyo says it nationalised the islands as a way to take the sting out of a potentially explosive attempt by nationalists to buy them, with talk of developing them for tourism.
It was somewhat wrong-footed by the vehemence of Beijing's response, which saw violent protests erupt across China and diplomatic ties frozen, badly affecting a huge trade relationship on which both countries depend.
A change of government in Tokyo did little to soothe matters when hawkish nationalist Shinzo Abe was elected prime minister.
Xinhua Tuesday accused him of turning a blind eye to the nation's "beautifying of atrocious wartime crime", the latest in a long line of tongue-lashings Chinese state media has delivered.
Eight Chinese ships spent several hours in the islands' territorial waters on Tuesday, four of which remained in the contiguous zone on Wednesday, Japanese officials said.
Contiguous waters are maritime zones adjacent to territorial sea where a coastal state has certain limited rights.
"We are preventing Chinese official ships from entering our territorial waters, with our ships sailing very close to the Chinese ships," coast guard official Miyako said.
Under the United Nations Convention on the Law of the Sea, a nation can evict foreign military ships that enter its territorial waters. However, he said, the rules regarding official ships, such as coastguards, are unclear.
"Therefore we are working in line with the Japanese government's policy of demanding they stay out of our territory," he said.
On Tuesday, Chief Cabinet Secretary Yoshihide Suga said the government was "considering it as an option", when asked if Japan would station officials on the islands, but did not elaborate.
Chinese foreign ministry spokesman Hong Lei said Beijing was "gravely concerned" by the remarks.
"China's resolve to defend the sovereignty of the Diaoyu islands is firm, and we will not tolerate the Japanese side taking action to infringe China's sovereignty," he said.
"The Japanese side must be prepared to bear the consequences of this provocation."
Japan annexed what it says were unclaimed islands in 1895. It says China's assertion of sovereignty only came after the discovery of resources in the seabed at the close of the 1960s.
Beijing maintains that the islands have been its territory for hundreds of years and were illegally snatched by Tokyo at the start of its acquisitive romp across Asia that culminated in World War II.