Foreign Minister Wang Yi faced questions about ties with the US ally during a visit to Washington, where he called for mutual respect in relations between the United States and a growing China.
Wang laid blame for tensions on Japan, which in September 2012 nationalized the islands, known as the Senkakus in Japanese and as the Diaoyus in Chinese.
"In spite of this, we are still ready to sit down and have a dialogue with the Japanese to work out jointly a way to manage the current situation," Wang said at the Brookings Institution.
"But first, Japan needs to recognize that there is such a dispute. The whole world knows that there is a dispute," he added.
"I believe there will be a day when the Japanese come back to the table of dialogue."
Japan contends that China has no historical basis to claim the islands and charges that Beijing is trying to challenge Tokyo's rule through military intimidation.
Japan's coast guard reported Thursday that two Chinese ships entered waters near the islands in the latest such incursion in the potentially energy-rich area.
Japanese Prime Minister Shinzo Abe, meeting briefly this month with Chinese President Xi Jinping on the sidelines of a G20 summit in Russia, called for an improvement in relations between Asia's two largest economies.
But the conservative prime minister has also pledged a firm line on defending sovereignty and has moved to step up officially pacifist Japan's defense spending and cooperation with the United States.
A previous Japanese government said it bought the islands from private owners to ward off a more provocative plan by outspoken nationalist Shintaro Ishihara, who then headed Tokyo's metropolitan government.
The United States says it takes no position on the ultimate sovereignty of the islands but considers them to be under the administration of Japan, meaning that the United States would be obliged to defend its ally under terms of a security treaty.
"For many of us, it has been very upsetting to see the world's second and third largest economies have their relationship become tense and deteriorate over what, to many of us on the outside, appear to be four uninhabited and uninhabitable rocks," Jeff Bader, who was President Barack Obama's top adviser on Asia from 2009 to 2011, told Wang as he moderated the event.