(Adds Chinese Defence Ministry statement)
By Kiyoshi Takenaka
TOKYO, Jan 23 (Reuters) - Japanese Prime Minister Shinzo Abe has said Japan and China should avoid repeating the past mistakes of Britain and Germany, which fought in World War One despite strong economic ties, according to his main government spokesman in Tokyo.
Abe was speaking on the sidelines of the World Economic Forum in Davos, Switzerland, on Wednesday.
His comments were provided by Chief Cabinet Secretary Yoshihide Suga after the Financial Times said Abe had told reporters that China and Japan were in a "similar situation" to Britain and Germany before 1914, whose close economic ties had not prevented the conflict.
He also said China's steady rise in military spending was a major source of regional instability, the newspaper reported.
Suga said earlier in the day that Abe's comments should by no means be interpreted to mean that war between the two Asian giants was possible, noting that Abe had said dialogue and the rule of law, not armed forces and threats, were needed for peace and prosperity in Asia.
Sino-Japanese ties, long plagued by what Beijing sees as Japan's failure to atone for its occupation of parts of China in the 1930s and 1940s, have worsened recently due to a territorial row, Tokyo's mistrust of Beijing's military buildup and Abe's December visit to a shrine that critics say glorifies Japan's wartime past.
Suga told a news conference that Abe - noting that this year is the 100th anniversary of the start of World War One - said Britain and Germany clashed despite their deep economic ties.
Asked if China and Japan might clash militarily, Abe replied that such a conflict "would be a great loss not only for Japan and China but for the world and we need to make sure such a thing would not happen", according to Suga.
China and Japan, the world's second- and third-largest economies respectively, have deep business ties and bilateral trade that was worth nearly $334 billion in 2012, according to Japanese figures.
China criticised Abe's historical reference. "It would be better to face up to what Japan did to China before the war and in recent history than to say stuff about pre-World War One British-German relations," Foreign Ministry spokesman Qin Gang told a news conference in Beijing.
U.S. Deputy Secretary of State William Burns, on a visit to Beijing this week, stressed that all sides should avoid unilateral action to assert maritime claims, and that China should work with its neighbours to reduce tension in the East and South China seas.
China's Defence Ministry said an air force patrol in the East China Sea Air Defence Identification Zone, set up by Beijing late last year despite protests from Japan, South Korea, the United States and others, had recently encountered several "foreign" military aircraft and given them verbal warnings.
It did not say which country the aircraft were from, but added that China had "investigated their identity".
NEW YEAR MESSAGE
In a message on Thursday to local Chinese-language papers ahead of the lunar new year, Abe said Japan had "built a free and democratic country and taken the path of peace" since the end of World War Two.
"Nothing has been changed in the policy of continuing to uphold this position," he said, according to a Japanese version provided by the prime minister's office. "I believe you, who live in Japan, can understand this fundamental stance of ours."
In his keynote address at the Davos forum, Abe called for military restraint in the region and took a veiled swipe at China's military buildup.
"We must...restrain military expansion in Asia, which could otherwise go unchecked," Abe said.
"Military budgets should be made completely transparent and there should be public disclosure in a form that can be verified," Abe said, adding disputes should be resolved through dialogue and the rule of law, and not through force and coercion. He did not single out China by name.
He also defended his visit to Tokyo's Yasukuni Shrine, which is seen by critics as a symbol of Japan's past militarism because it honours leaders convicted as war criminals along with those killed in battle.
China's state Xinhua news agency blasted the Yasukuni visit again on Thursday, saying it was "taken by all peace-loving nations as a despicable kowtow to Fascism" and accusing Abe of pushing "regional tensions precariously close to boiling".
Xinhua added: "While frozen ties with neighbouring countries can never make Japan a reliable and constructive player in regional and global issues, sincere repentance over its war past can."
Abe's Dec. 26 pilgrimage prompted a rare statement of disappointment from Tokyo's ally Washington, which is worried about rising regional tensions and fears entanglement in any conflict over tiny, uninhabited isles in the East China Sea that are controlled by Japan but also claimed by China. (Reporting by Kiyoshi Takenaka and Elaine Lies,; Additional reporting by Megha Rajagopalan and Ben Blanchard in BEIJING; Writing by Linda Sieg; Editing by William Mallard and Raju Gopalakrishnan)