Japan hailed a thaw in relations with China while urging greater military transparency from its neighbour in an annual diplomatic review published Tuesday.

Japan has "further strengthened its alliance with the United States and at the same time moved its Asian diplomacy forward greatly by improving and promoting relations with China and strengthening relations with India," the report said.

Chinese Premier Wen Jiabao's visit to Japan in April last year and his Japanese counterpart Yasuo Fukuda's trip to China in December had helped to foster a "high-level dialogue," it noted.

Wen was received in Tokyo by then-prime minister Shinzo Abe, who had visited Beijing six months earlier to revive top-level bilateral exchanges.

China shunned meetings with Abe's predecessor Junichiro Koizumi because of his repeated visits to a shrine dedicated to the Japanese war dead including wartime leaders convicted by the US-led allied powers as criminals.

Although relations between the two countries have improved since Koizumi stepped down, frictions remain over issues such as gas exploration rights in the East China Sea.

The review, which was published by the foreign ministry, expressed caution about China's military modernisation and active diplomacy in Asia, Africa, the Middle East and Latin America.

"While welcoming China's position to involve itself in resolving various international issues, Japan has been asking China to maintain transparency and act in accordance with international norms with regard to its military modernisation and external assistance," it said.

Japan has been working to repair often tense ties with China but has also repeatedly voiced unease over its neighbour's rising military spending.

In late 2004, the Japanese government under Koizumi, who was a stanch ally of US President George W. Bush, angered Beijing by explicitly pointing to China as a potential threat. China says Japan has nothing to fear from its military build-up.

In a separate document, the foreign ministry Tuesday criticised Beijing's test last year that shot down a Chinese satellite in space.

"Japan has concerns about such a test from the viewpoints of the safe use of outer space and security," the document said.

It added: "China has explained that the test was not aimed at any country and did not pose a threat to any country. But it has not offered explanations to help erase the worries of the international community including Japan."