Japan posted a higher-than-expected trade deficit in September as exports sank on the back of a territorial dispute with the world's second-largest economy, China.

According to the country's Finance Ministry, exports declined by an annual rate of 10.3% last month, worse than the 5.8% decrease in August and the 9.9% fall expected.

This was the sharpest decline since the aftermath of the earthquake and tsunami in 2011.

Shipments to China alone decreased by 14.1% when compared with September 2011, worse than the 9.9% registered the month before. The two Asian economies have been in a stand-off over a group of islands in the East China Sea, known as Senkaku in Japan and Diaoyu in China.

The issue is that both nations, as well as Taiwan, have claimed the land.

Meanwhile, with imports rising by a more-than-forecast 4.1% - Japan purchased more oil and liquefied natural gas as a result of lost nuclear activity - the trade deficit was 588.6bn yen, higher than the 547.9bn expected by a consensus of analysts.

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