Kenneth Lieberthal, senior fellow in Foreign Policy and Global Economy and Development at the Brookings Institution, said that China's newly-established Air Defense Identification Zone (ADIZ), which covers the disputed Diaoyu Islands, is legal, and China has the right to set up such an air space.

"I think China's decision to announce an ADIZ reflects its increasing maritime capabilities. It reflects the gradual change in the balance of power in Asia," Lieberthal told China.org.cn on the sidelines of the International Dialogue on the Chinese Dream, held in Shanghai.

His remark came after U.S. Vice President Joe Biden concluded his trip to Japan, China and South Korea this week. After provocations from Japan increased tensions over the Diaoyu Islands, discussion about the establishment of the new zone became the focus point of Biden's trip.

Lieberthal said that the announcement of the zone and the reaction from the U.S. and other countries in the region highlights the importance of all countries in the region working together to develop mechanisms to handle disagreements and manage crises.

"Currently, there is no effective multilateral mechanism for this in northeastern Asia, and that needs to change," he said. "I was very pleased to see that Vice President Biden focused on this point during his trip to Tokyo, Beijing and Seoul -- the importance of countries starting to talk not only about how to reduce tensions, but also about how to manage them to avoid a crisis."