The festering trade dispute between China and Japan intensified yesterday with China demanding that its neighbour remove import curbs on three of its farm products.

In a tit-for-tat row, China imposed 100 per cent punitive tariffs on imports of Japanese vehicles, mobile phones and air conditioners last Friday in response to the imposition by Japan of levies on Chinese shi'itake mushrooms, spring onions and rushes for tatami mats.

Japan claims the row will cost its domestic manufacturers up to $540 million (€628 million) a year unless it is resolved. Analysts estimate the damage could be higher, and could run up to $700 million.

Japan insists it imposed the temporary "safeguard" curbs under World Trade Organisation rules, which preclude retaliation, to protect domestic industries from cheap imports. But China hotly disputes that, claiming the curbs amount to trade protectionism which violate WTO rules.

Yesterday, a Chinese Ministry of Foreign Affairs official was quoted in the state news agency, Xinhua, as saying the only way to resolve the problem is to immediately abolish the import restrictions on the Chinese products.

"Let he who tied the bell on the tiger take it off," said the official.

Meanwhile, a Japanese government official said the two countries had been discussing the possibility of holding talks to resolve the dispute but had yet to set a date or place for such discussions.

Japan was unlikely to lift its curbs without first having discussions with China, the Japanese official added.

"We really have to discuss with the Chinese side. We don't think we can lift our temporary measures now," the official said.