Abe was speaking on the sidelines of the World Economic Forum in Davos, Switzerland on Wednesday. (Agencies)
His comments were provided by Chief Cabinet Secretary Yoshihide Suga after the Financial Times said Abe had told reporters that China and Japan were in a "similar situation" to Britain and Germany before 1914, whose close economic ties had not prevented the conflict.
He also said China's steady rise in military spending was a major source of regional instability, the newspaper reported.
Suga said earlier in the day that Abe's comments should by no means be interpreted to mean that war between the two Asian giants was possible, noting that Abe had said dialogue and the rule of law, not armed forces and threats, were needed for peace and prosperity in Asia.
Sino-Japanese ties, long plagued by what Beijing sees as Japan's failure to atone for its occupation of parts of China in the 1930s and 1940s, have worsened recently due to a territorial row, Tokyo's mistrust of Beijing's military buildup and Abe's December visit to a shrine that critics say glorifies Japan's wartime past.
Suga told a news conference that Abe - noting that this year is the 100th anniversary of the start of World War One – said Britain and Germany clashed despite their deep economic ties.
Asked if China and Japan might clash militarily, Abe replied that such a conflict "would be a great loss not only for Japan and China but for the world and we need to make sure such a thing would not happen," according to Suga.
China and Japan, the world's second- and third-largest economies respectively, have deep business ties and bilateral trade that was worth nearly $334 billion in 2012, according to Japanese figures.
China criticised Abe's historical reference. "It would be better to face up to what Japan did to China before the war and in recent history than to say stuff about pre-World War One British-German relations," Foreign Ministry spokesman Qin Gang told a news conference in Beijing.
U.S. Deputy Secretary of State William Burns, on a visit to Beijing this week, stressed that all sides should avoid unilateral action to assert maritime claims, and that China should work with its neighbors to reduce tension in the East and South China seas.
Abe was speaking on the sidelines of the World Economic Forum in Davos, Switzerland on Wednesday.