GWEN IFILL: And we turn now to Asia, where a land dispute has revived longstanding tensions between China and Japan.
Margaret Warner has more.
MARGARET WARNER: Chinese police stood three rows deep today, keeping crowds of protesters at bay outside the Japanese Embassy in Beijing.
The demonstrators brandished posters of Mao Zedong, founder of China's communist state. Others set Japanese flags aflame and lobbed eggs and plastic bottles.
Officially, the protest marked a 1931 incident that triggered Japan's invasion and occupation of China.
But the immediate spark was a land dispute in the here and now. It involves five uninhabited islands and three reefs in the East China Sea known as the Diaoyu in China and Senkaku in Japan. The waters are rich in fishing grounds and promising oil and gas deposits and close to important shipping lanes as well.
Last week, Japan reignited the long-smoldering issue when it bought the islands from private Japanese owners. The Chinese responded by sending patrol ships into the waters around the islands, drawing objections from Tokyo.
SATOSHI MORIMOTO, Japanese defense minister (through translator): Well, there are no doubts that the Senkaku islands are an integral part of Japanese territorial land and international law.
So I deeply regret that the Chinese government vessels have intruded into Japan's territorial sea space.
MARGARET WARNER: Then, over the weekend, large protests erupted in Chinese cities, targeting Japanese embassies and businesses. In some places, they turned violent.
Major Japanese companies, including Toyota, Honda and Canon, temporary closed operations and urged their Japanese employees to stay indoors. Yesterday, the Chinese government moved to tamp down the demonstrations, stepping up police presence and announcing arrests.
But then reports surfaced of two more Japanese activists landing on one of the islands.
Chinese activists have done the same in the past month. And, today, Chinese media released images of more than 20 Chinese fishing vessels arriving at the islands, a move the foreign minister defended in Beijing.
HONG LEI, Chinese Foreign Ministry (through translator): China is no longer a victim of bullying. China will not see its territories violated.
The Japanese purchase of the islands will not get in its way. We urge them to take seriously the Chinese people's demand, correct the mistakes, stop their violations, and get back to the consensus with China and negotiate.
MARGARET WARNER: Amid the tensions, U.S. defense secretary Leon Panetta was in Japan yesterday and China today. In Japan, he urged caution on both sides.
DEFENSE SECRETARY LEON PANETTA: It's in everybody's interest, it is in everybody's interest for Japan and China to maintain good relations and to find a way to avoid further escalation.
MARGARET WARNER: Today, after meeting with Panetta, China's defense minister, General Liang Guanglie, refused to rule out any options in dealing with Japan.
GEN. LIANG GUANGLIE, Chinese defense minister (through translator): In the future, we will continue to follow very closely the evolvement of the situation with regards to this dispute. And we reserve the rights for further action. Of course, that being said, we still hope for a peaceful and negotiated solution to this issue.
MARGARET WARNER: Secretary Panetta continues his three-day visit to China tomorrow.