Japan says it expects Chinese delegates to attend next week's meeting of the International Monetary Fund in Tokyo, despite Beijing's heated territorial dispute with Japan.

A senior Japanese finance ministry official said Thursday that China's finance minister and central banker are both slated to attend the annual meetings.

Some major Chinese banks have already pulled out of the forum, prompting speculation that the entire Chinese delegation would do the same.

China-Japan relations have sharply deteriorated in recent days after Tokyo angered Beijing by nationalizing a group of islands that are claimed by both countries.

International Monetary Fund chief Christine Lagarde urged China and Japan to resolve the dispute quickly, saying the unstable global economy needs both economic powers to be “fully engaged.”

China, which has the world's second largest economy, has threatened to impose economic sanctions on Japan because of the dispute. Tensions have also been high at sea, with China regularly sending patrol ships near the Japan-controlled islets.

The islands, known as Senkaku in Japan and Diaoyu in China, are surrounded by rich fishing grounds and potential energy deposits.

Japan says its decision to purchase the islands from private Japanese owners was made to preserve stability, as Tokyo's nationalist governor had threatened to purchase the islands and build developments on them.

But the move enraged China, which says the islands are an essential part of Chinese territory that was “stolen” by Japan at the end of the 19th century, following the Sino-Japanese war.