Major Chinese banks will skip World Bank and International Monetary Fund meetings this week in Japan, China's state media said, in apparent protest over a territorial dispute between the two countries.

China and Japan are locked in a festering row over East China Sea islands that has seen the two sides trade insults, touched off protests in China, and hurt Japanese firms doing business in the Chinese market.

Four state-owned banks – the Industrial and Commercial Bank of China, Bank of China, China Construction Bank and Agriculture Bank of China – will not attend the meetings, Xinhua news agency reported late on Monday.

The dispute between the world's second and third-largest economies, which escalated last month after Tokyo nationalised three of the islands, has raised fears it could further drag down the already struggling global economy.

The world cannot afford for the two economic heavyweights to allow the dispute to drag on, IMF chief Christine Lagarde said in an interview published last week.

Japan's top three carmarkers Toyota, Honda and Nissan plan to scale back production in China – the world's biggest car market – as anti-Japanese sentiment has hit sales, Japanese media reports have said.

Other Japanese factories and businesses in China closed or scaled back operations in September for fear they or their employees could be targeted by mobs after Tokyo nationalised the islands.