Japanese Ambassador to China Masato Kitera said on Saturday that China-Japan ties are now in a "tough situation" as bilateral tension over a territorial dispute in the East China Sea continues.

Kitera was making his first public appearance since taking office in Beijing in late December. He was addressing a joint coming-of-age ceremony of more than 200 Japanese and Chinese college students who will turn 20 this year.

Feuding flared after the Japanese government illegally "purchased" part of the Diaoyu Islands last September, and public fury was aroused in China as massive crowds took to the streets in protest.

Kitera stressed the importance of public diplomacy by youths from both countries to stimulate deeper mutual understanding.

Yusuke Motooka, a student at the Beijing International Studies University who attended the event, said Japan's domestic media projected a relatively negative image of China before he came here.

"I felt little difference in the campus since ties soured," Motooka said.

Both China and Japan have considerable shared and reciprocal interests in economic and cultural exchanges, and even right-wing policy makers in Japan cannot afford a "complete impasse" of bilateral ties, said Liang Yunxiang, professor of Japanese studies at Peking University.

Since September, Japan's exports to China have experienced a sharp drop including in the automobile sector, which has aggravated the country's economic downturn.

And Japan's Jiji Press news agency on Saturday quoted Japanese think tanks assaying that the country's sluggish economy might perk up this year as exports to China "slowly recover".

Kitera expected better and friendlier relations this year as the countries mark the 35th anniversary of the signing of China-Japan Treaty of Peace and Friendship, a key document that requires a peaceful resolution for bilateral disputes.

Zeng Guangming, in his sophomore year as a Japanese language major at the Beijing Foreign Studies University, said public diplomacy might be "a new starting point" for easing tension.

"Civilian exchanges had worked more than 40 years ago when both countries normalized diplomatic relations," Zeng said.

The top priority for both the ambassador and the Japanese prime minister is to "find the structural problem and contradiction (that lie in between) and then search for an impetus to achieve a breakthrough", Liang Yunxiang said.

Lu Yaodong, director of the department of Japanese diplomacy of the Institute of Japanese Studies at the Chinese Academy of Social Sciences, warned that there are lingering contradictions on China-related policies by the new Japanese cabinet.

"Japanese Prime Minister Shinzo Abe has vowed to ensure the concept of bilateral strategic and mutually beneficial relationship, yet he has also denied the existence of the Diaoyu Islands dispute, which has led to conflicting proposals," Lu said.