Japan has hit back at criticism from China over repeated visits to a controversial war shrine by Japanese Prime Minister Junichiro Koizumi.
The Yasukuni Shrine honours Japan's war dead
Chinese Foreign Minister Li Zhaoxing said on Tuesday the visits had been described as "stupid" and "not moral".
Japanese Chief Cabinet Secretary Shinzo Abe said it was "inappropriate" for the head of a diplomatic service to make such comments about another leader.
Japan also turned down a Chinese proposal on disputed gas fields.
"It is inappropriate for the head of a diplomatic service to call the leader of another country 'stupid' or 'amoral', terms which offend a person's dignity," Mr Abe told a news conference on Wednesday, when asked about Mr Li's comments.
Built in 1869 to honour victims of the Boshin Civil War
Now venerates the souls of 2.5m of Japan's war dead
Those enshrined include 14 Class A war criminals
The row over Mr Koizumi's visits to the Yasukuni War Shrine in Tokyo - which honours 2.5m war dead including 14 World War II criminals - has been dragging on for months.
But there were hopes of an improvement in relations following a visit to China by Japan's trade minister last month.
But on Tuesday, Li Zhaoxing spoke about the Yasukuni row at a news conference.
"A German official told me that German people cannot understand how Japanese leaders can do this," he said.
"This kind of stupid thing is not moral in nature this is what Germans are saying. They said that after World War II, not one German leader ever worshipped Hitler or the Nazis."
China and Japan's exclusive economic zones (EEZs) overlap
Japan claims EEZ extends 200 nautical miles from its shore, while China claims EEZ extends to edge of its continental shelf
Two countries have never agreed a maritime border
The UN says it will arbitrate by May 2009
Also dispute ownership of Senkaku/Diaoyu islands
Mr Koizumi, who has visited the shrine five times since taking office in 2001, has insisted that he is not trying to glorify war criminals, but instead to pray for peace.
Another major irritant between the two Asian giants is the issue of gas fields in a disputed area of the East China Sea.
Talks between the two sides ended on Tuesday with a Chinese proposal to jointly develop the gas fields, an offer Japan rejected on Wednesday.
"This proposal is something that is not acceptable," Mr Abe said.
Japan itself had previously proposed a joint development plan, pertaining to all the disputed gas fields, something China rejected.
China has now offered something more limited - the joint exploitation of gas fields around a group of islands hotly contested by both countries.
All the time they have been discussing the issue, the BBC Tokyo correspondent says, China has been drilling in the disputed area, and sending in its warships.
Japan and China have long had overlapping claims in the East China Sea.
China refuses to recognise Japan's off-shore border, believing its own territory runs further east to the edge of the continental shelf.
Four rounds of talks on the issue have now failed to reach agreement.