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Thousands of Chinese demonstrated in streets and at embassies Tuesday in unprecedented protests assailing Japan over its claims to an island chain that the communist government says belongs to China, prompting Japan to shutter factories in China.

Defense Secretary Leon Panetta, who met today with Chinese leader-in-waiting Xi Jingping, urged calm.

But as thousands of Chinese joined in anti-Japanese protests, a car carrying the U.S. ambassador to China, Gary Locke, was mildly damaged after being surrounded by protesters outside the U.S. Embassy, the State Department said in a statement. Locke was unhurt.

A Japanese coast guard vessel issued a warning Tuesday to a Chinese vessel near the Senkaku Islands, which are about 200 miles from the Japanese island of Okinawa and the Chinese mainland. Japan officials could not confirm reports in Chinese state media that more than 1,000 Chinese fishing boats were headed toward the island group that China calls the Diaoyu Islands.

"I feel so angry at the Japanese; they started this," said Luo Wei, 24, whose employer, a publisher, has allowed her time off to protest every day since Friday. "I will keep coming here to protest each day until Japan retreats. The Diaoyu Islands are ours."

Several cities blew sirens, including Shenyang, in northeast China, the region first occupied by Japan in the 1930s. In Beijing, several hundred protesters marched and chanted outside the Japanese Embassy.

Many carried portraits of Chairman Mao Zedong and banners with vitriolic slogans. Some demonstrators threw water bottles at the embassy, but the heavy security presence prevented a repeat of recent anti-Japanese violence -- targeting Japanese cars and businesses -- reported in some cities.

Numerous Japanese factories, shops, restaurants and schools in China were closed after some were targeted by looting protesters over the weekend. The China Daily newspaper reported Mazda halted production at its Nanjing factory for four days, Canon closed three factories and gave 20,000 employees two days' paid vacation, and Fast Retailing shut 19 of its Uniqlo clothing stores.

The newspaper said more than a dozen Yokado supermarkets and 198 7-Eleven convenience stores under Japanese management were also temporarily shuttered.

Some protesters vented anger at the United States for boosting its military presence in East Asia, a move they say emboldened Japan and other countries to be more assertive in staking rights to territory also claimed by China. Members of Japan's conservative opposition are calling for the government to get tough with China.

"History clearly shows that this is our territory," said Nobuteru Ishihara, a front-runner for the Liberal Democratic Party's top post.

Japan's Embassy in the United States said the islands are an "inherent" part of Japan, historically and legally. China's defense minister, Gen. Liang Guanglie, repeated China's position that the islands have always been Chinese and blamed Japan for "heating up" the issue, the state-run Xinhua News Agency reported.

"We reserve the right to take further actions, but we hope the issue will be properly resolved through peaceful ways," he said.

China and Japan, the world's second- and third-largest economies, share a huge trade relationship but ties have long been strained by China's bitter memories of Japanese occupation. Tuesday was the 81st anniversary of a 1931 incident Japan used to begin its occupation of China.

Current tensions represent a significant worsening of relations, Asia analysts say, but the demands of domestic politics in both nations leave little room for compromise.

"This is really a turning point in the bilateral relationship," said Wang Zheng, who researches China's external conflicts with neighboring countries, at Seton Hall University in New Jersey. "Mutual hostility is really increased in both countries and the room for flexibility is very limited."

The arrival of hundreds of Chinese fishing boats that Xinhua said were heading to the islands' waters could make a conflict with Japanese patrol boats hard to avoid, Wang said.

The scale of anti-Japan protests in China, and the number of cities involved, is "unprecedented," said Tetsuo Kotani, a maritime security specialist at the Japan Institute of International Affairs in Tokyo.

"It's a territorial issue, and neither side can back off at this moment, so things will continue to escalate," Kotani said.

China's ruling Communist Party, about to undergo a leadership change, is especially sensitive to Japan's actions while Japan's government faces a general election as soon as November and opposition leaders are demanding it take a tougher stance on the islands, Kotani said. A new administration is likely to change the status quo and start developing the islands, angering China further, he said.

"People in China believe it was a stage show between the two," said Wang Dong, head of the Center for Northeast Asian Strategic Studies at Peking University. Despite a recent personal appeal from Chinese President Hu Jintao, Japanese Prime Minister Yoshihiko Noda nationalized the islands "for selfish political benefit," Wang said.