Japan's new ambassador to China on Monday expressed his country's desire to boost economic links as a way to thaw cooling ties amid tension over the Diaoyu Islands.

Observers said Japan worries about becoming further marginalized if it completely quits China's huge market, and Japan should realize that trade will not improve if the country makes no major progress in resolving the territorial standoff.

Masato Kitera, a career diplomat who will succeed Uichiro Niwa as Japan's ambassador to China, told Japan's NHK Television on Monday that his "number one mission is to improve the Japan-China relationship".

The China-Japan ties were soured in September after the Japanese government illegally "purchased" part of the Diaoyu Islands.

"I will explain to China's senior officials we need to make economic ties warmer if our political relationship is cooling, as Japanese corporate activity in China is contributing to the Chinese economy," he said.

"It is important to boost exchanges in various fields so as to ease bitter public sentiment against each other," said Kitera, who will take office in Beijing on Tuesday.

His comments come after Japan's incoming prime minister, Shinzo Abe, on Saturday also pledged to seek a thaw in ties with China. A news report said he will send a special envoy on a fence-mending mission to Beijing, Reuters said.

Zhou Yongsheng, an expert on Japanese studies at China Foreign Affairs University, said the sluggish Japanese economy will receive a new stimulus on the condition that China-Japan ties are warmed and Japan further taps into China's market.

"Japan has shown concern about its growing economic dependence on China. However, if Japan refuses to deepen reciprocal economic integration, it will be gradually marginalized in the East Asia regional economy," Zhou said.

Foreign Ministry spokesman Hua Chunying on Monday welcomed Kitera's new mission in Beijing.

Kitera is expected to boost China-Japan ties, communicate with the Chinese community to deepen his understanding of China, and contribute to a proper solution of the existing difficulties that both sides are facing.

Abe might ask upper-house lawmaker Yoriko Kawaguchi to return for another stint as foreign minister, Kyodo News Agency reported on Monday.

Abe is now deciding on the lineup for his Cabinet, which is likely to be formally inaugurated on Wednesday, and Japan's next foreign minister will serve against a backdrop of rising tensions with China, according to AFP.

Meanwhile, the escalating Diaoyu Islands row has given rise to the most serious situation since both countries normalized their diplomatic ties 40 years ago, a leading Chinese think tank said on Monday.

Given Tokyo's persistent stance over the dispute as well as Beijing's unwavering determination to guard its sovereignty, the possibility of further escalation, and even a military conflict, "cannot be ruled out", the Chinese Academy of Social Sciences said in an annual report on international politics and security of 2013 on Monday.