Japan and China should resolve a bilateral row over gas projects in the East China Sea through dialogue, Economy, Trade and Industry Minister Shoichi Nakagawa said Friday.

His remarks followed protests by Beijing over Tokyo's decision to grant test-drilling rights in a disputed area to a Japanese oil company.

"China recognized that it is in a dispute (with Japan) over the sea area," he told a news conference. "I want the country to sincerely discuss the matter."

The two nations should now try to make efforts to turn the disputed waters into "a sea of friendship," Nakagawa said.

Japan granted Teikoku Oil Co. concessions Thursday to conduct experimental drilling in the disputed waters, which immediately drew fire from China, which already has platforms operating.

Chinese Foreign Ministry spokesman Liu Jianchao said later Thursday that Japan's decision would cause "severe damage" to China's claim and "further complicate" matters.

A Chinese consortium has been conducting gas projects near the sites to be explored by Teikoku Oil.

Liu claimed it is "an objective fact" that the two countries have a dispute over the area. "We strongly urge the Japanese side not to undertake activities not good for stability in the East China Sea or overall Sino-Japanese relations," he added.

China lodged a formal protest with Japan on Friday.

Cui Tiankai, chief of the Chinese Foreign Ministry's Asia Department, summoned Chihiro Atsumi, minister at the Japanese Embassy, and accused Japan of violating the U.N. Convention on the Law of the Sea, according to a Chinese Foreign Ministry statement.

The sites for Teikoku Oil's test-drilling are just east of what Japan claims as a median line separating the 200-nautical-mile exclusive economic zones of Japan and China in the East China Sea, an area about 400 km east of Shanghai. China says the line is invalid, but its platforms are just on its side of the line.

The Japanese Embassy in Beijing issued a statement Friday rejecting China's claim. Japan made a comprehensive decision in April -- in line with the U.N. Convention on the Law of the Sea -- to protect Japan's rights to prospect for oil and gas in the East China Sea, the statement says.