China has canceled a ceremony marking the 40th anniversary of the establishment of diplomatic ties with Japan.

China's state news agency, Xinhua, says the event has been postponed until what Beijing called a more appropriate time. The ceremony was first due to be held on September 27.

The two nations are engaged in an escalating dispute over a group of small islands in the East China Sea. Both countries claim the islands known as Senkaku in Japan and Diaoyu in China.