By Kiyoshi Takenaka and Kaori Kaneko
TOKYO (Reuters) - Japanese Coast Guard vessels fired water cannon to turn away about 40 Taiwan fishing boats and eight Taiwan Coast Guard vessels from waters Japan considers its own on Tuesday in the latest twist to a row between Tokyo and Beijing.
Japan protested to Taiwan, a day after it lodged a complaint with China over what it said was a similar intrusion by Chinese boats.
Sino-Japanese relations deteriorated sharply this month after Japan bought disputed East China Sea islands, called Senkaku in Japan and Diaoyu in China, from their private owner, sparking anti-Japan protests across China.
Taiwan has friendly ties with Japan, but the two sides have long squabbled over fishing rights in the area. China and Taiwan both argue they have inherited China's historic sovereignty over the islands.
Japanese Chief Cabinet Secretary Osamu Fujimura said the coast guard used water cannon and other measures to get the Taiwan ships to change course.
All the Taiwan fishing boats and coast guard ships had since left territorial waters, the Japanese Coast Guard said.
Japanese public broadcaster NHK showed footage of a Japanese Coast Guard ship shooting water at a Taiwan fishing boat, while a Taiwan patrol vessel blasted water at the Coast Guard ship in reply.
While few experts expect a military confrontation, an unintended clash at sea would increase tension, although all sides are expected to try to manage the row before it spirals out of control.
Japan's top diplomat, Vice Foreign Minister Chikao Kawai, was in Beijing for a meeting with Chinese Vice Foreign Minister Zhang Zhijun in a bid to ease tensions between Asia's two biggest economies.
An official at the Japan-China Economic Association said that Toyota Motor Corp Chairman Fujio Cho and Hiromasa Yonekura, chairman of Japanese business lobby Keidanren, and other representatives of Japan-China friendship groups would attend an event on Thursday in Beijing.
This comes despite the cancellation of a bigger event to mark the 40th anniversary of the normalization of diplomatic ties, called off because of the chill in relations.
"We've just lodged a protest with the Taiwan side," Fujimura told a news conference. "...Our stance is that this is something that needs to be solved in the context of good bilateral ties between Japan and Taiwan. We would like to address the issue calmly."
China's Ministry of Agriculture for its part said close to 200 Chinese boats have been fishing in seas around a group of rocky islands, near rich fishing grounds and potentially huge gas reserves, disputed with Japan.
The Chinese statement did not specify whether the boats were all there at once or say how close they were to the islands. Beijing, which regards self-ruled Taiwan as a renegade province, may have included Taiwan fishing boats in its estimate.
The flare-up in tension comes at a time when both China and Japan confront domestic political pressures. Japanese Prime Minister Yoshihiko Noda's government faces an election in months, adding pressure on him not to look weak on China.
China's Communist Party is preoccupied with a leadership turnover, with President Hu Jintao due to step down as party leader at a congress that could open as soon as next month.
A group of Taiwan fishing boats left for the islands in heavy rain on Monday. The group said the boats would sail around the islands and assert their right to fish there - and did not rule out attempting to land. As many as 100 Taiwan fishing boats may be in the area, Japanese media said.
Japan said that four Chinese surveillance vessels and two Chinese fishery patrol ships were in nearby waters but outside its territory.
(Writing by Linda Sieg in Tokyo; additional reporting by Chris Buckley and Sui-Lee Wee in Beijing; Editing by Nick Macfie)