Uichiro Niwa, former Japanese ambassador to China, said Japan downplayed China's possible reaction to the announcement that Tokyo would buy the disputed Senkaku island archipelago from is private Japanese owner.
The group of islets is at the center of a bitter territorial dispute.
"The government of Japan transferred ownership from an individual to the state based on its domestic law but once an issue involves crossing waters, it becomes a diplomatic issue," Niwa said in a report in The Bangkok Post.
"I think (Japan) should have taken it more seriously and offered a diplomatic explanation to China. (Prime Minister Yoshihiko) Noda made (Chinese President) Hu Jintao lose face as head of state."
That led to "raging reactions" from Beijing, Niwa said.
"The Japanese side appeared to have underestimated it to a certain degree," he said.
The Senkakus, also known as the Daioyu Islands, are five uninhabited islets and three barren rocks. The archipelago is approximately 120 nautical miles northeast of Taiwan, 200 nautical miles east of the Chinese mainland coast and 200 nautical miles southwest of the Japan's southernmost Ryukyu island of Okinawa.
The largest of the islands is 2 square miles in area but the surrounding waters not only are rich fishing grounds but geological testing has indicated that the seabed could contain valuable minerals and hydrocarbon deposits.
The dispute only really came to the forefront of Chinese-Japanese diplomacy after the rise of China as a military and economic power in recent years. But the issue dates to the 19th century with Japan's 1872 annexation of the Ryukyu archipelago, which includes Okinawa, and its 1895 subsequent annexation of Taiwan.
Former Chinese leader Mao Zedong said the island chain was an issue that was of little importance and could be put off for "later generations."
The territorial dispute threatened to involve the United States in 1996 when a U.S. State Department spokesman refused to say outright whether the U.S.-Japan Security Treaty covered these disputed islands, a position since maintained by the U.S. government urged the two sides to seek a peaceful resolution to their differences.
Heightening the tension between the two nations' assertions to sovereignty are their subsequent claim to an Exclusive Economic Zone under provisions of the Third U.N. Convention on the Law of the Sea, which came into force in November 1994.
Under UNCLOS III, a nation can claim an EEZ of 200 nautical miles from its coastline.
There remains the possibility that the dispute can be peacefully resolved. Speaking on the sidelines of the annual World Economic Forum in Switzerland, China's envoy to the United Nations in Geneva Liu Zhenmin remarked that Beijing hopes the new government in Tokyo will face up to historical reality "and take the right measures to overcome the difficulty in relations with China, and bring relations back on the track of normal development."