Japan and China must use diplomacy to quell heightened bilateral tensions, or the region and the world will face "catastrophic" consequences, Prime Minister Abdullah Ahmad Badawi warned today.

The deterioration in relations between China and Japan could have "potentially disastrous consequences on regional peace and stability," Abdullah told a gathering of diplomats here.

"The consequences to the region and the world will be nothing less than catastrophic if current trends continue," he said.

Both sides should make "greater use of quiet diplomacy to resolve differences," he added. "It is in the interests of all parties, the region and the world that the slide is arrested, and that harmonious relations prevail."

Abdullah called for compromise, saying reconciliation would be easier if "narrow nationalist interpretations of history are not condoned" in Japan and there were no "extreme and repeated demands for contrition" from China.

"If history is successfully laid to rest, it will make possible a new era of mutual trust and dynamic cooperation," he said.

"The sooner the outstanding territorial disputes in northeast Asia are resolved, the better it would be for long-term peace and stability."

Abdullah was speaking at an Asia-Pacific roundtable event organised by the Institute of Strategic and International Studies.

Friction is inevitable

Singapore's Prime Minister Lee Hsien Loong also called last week for the two Asian powers to tone down the nationalism that has fuelled the rising tensions, saying that "friction is inevitable" as their influence rises.

China in April saw major protests venting fury at Japan over its record of wartime history and denouncing Japan's bid to win a permanent seat on the UN Security Council.

In the latest spat, Chinese Vice Premier Wu Yi abruptly cancelled a meeting with Japanese Prime Minister Junichiro Koizumi over his visits to a shrine to war dead.

Last month, Chinese associations in Malaysia and several members of parliament denounced Japan's war record, saying the nation should never forget nor forgive atrocities committed by Japanese soldiers during their World War II occupation.

Malaysia, which will sign a free-trade agreement with Japan in December this year, has said it would back Japan for a permanent seat on the Security Council.