Xi Jinping and Shinzo Abe hold talks after one-year hiatus amid East China Sea spat

Japan's Prime Minister Shinzo Abe (left) shakes hands with China's President Xi Jinping before the G20 leaders' family photo in Hangzhou on Sept 4, 2016.
Japan's Prime Minister Shinzo Abe (left) shakes hands with China's President Xi Jinping before the G20 leaders' family photo in Hangzhou on Sept 4, 2016. PHOTO: AFP

TOKYO (BLOOMBERG) - Chinese President Xi Jinping and Japanese Prime Minister Shinzo Abe held a sit-down meeting on Monday (Sept 5), breaking a hiatus of more than a year even as tensions run high over disputed islands in the East China Sea.

Mr Xi told Mr Abe that they should deal with the spat via dialogue, warning ties have entered a phase where "no progress means regression."

He added that the relationship is still "troubled by complications at times."

"Both sides should bolster their sense of responsibility and crisis awareness, and work to build on the positive elements of bilateral ties while putting a lid on negative ones," Mr Xi said, according to the official Xinhua News Agency.

Mr Abe agreed the nations should work together more closely, and said he'd given Mr Xi his "honest thoughts."

The leaders talked for around 30 minutes on the sidelines of the G-20 summit in Hangzhou, China, having shaken hands the previous day as the leaders' meeting got underway.

"Although the time for this summit was limited, we could hold deep talks," Mr Abe told reporters afterward. "China has long been an important friend of Japan. It has a major responsibility for regional peace and stability and for the global economy."

COMMUNICATIONS MECHANISM

Mr Xi wanted to extend the meeting but was potentially running late for bilateral talks with other leaders in town for the G-20, Japan's Deputy Chief Cabinet Secretary Koichi Hagiuda said in a briefing in Hangzhou. He described the atmosphere in the meeting as good, albeit frank.

The two countries agreed to speed up a planned aerial and maritime communications mechanism aimed at preventing a clash in the East China Sea. It has not been put into practice despite years of discussions.

The leaders of Asia's two largest economies last met in April 2015 at the Asian African summit in Indonesia. Since then, progress on ties has been hampered by what China has called Japan's interference in its territorial disputes over the South China Sea and by China's growing presence around the Japan- controlled East China Sea islets.

Indeed, Mr Xi appeared to take a swipe at Mr Abe over the South China Sea, saying Japan should "exercise caution in its words and deeds" on the matter, according to Xinhua. Mr Abe, meanwhile, told reporters after the meeting that it's important to resolve the South China Sea disputes according to international law.

ECONOMIC LINKS

While trade and tourism ties have held up - China is Japan's biggest trading partner - the countries can ill afford a further worsening in relations amid global economic headwinds. The risk of an unintended physical clash around the East China Sea also lingers.

On the morning of the Xi-Abe summit, Japan's coastguard said four Chinese coastguard vessels were in the zone immediately outside what Japan sees as its territorial waters surrounding islands known as Senkaku in Japan and Diaoyu in China. Last month saw a spike in entries by Chinese government vessels to Japanese-controlled waters, prompting formal complaints by the Japanese government.

"It sounds like the talks were held in a friendly environment," said Prof Zhou Yongsheng, an international relations professor at the China Foreign Affairs University. "Both sides realised the disputes have seriously harmed their economic ties, and they all want to make the relationship better."

"The only problem is that the two leaders lack political trust and that needs a long time to repair. This relation is still fragile and often broken," he said.

China-Japan ties deteriorated to their worst state in decades in 2012, when Japan bought three of the five uninhabited islands from a private landlord. The following year China established an air defense identification zone covering the disputed area and Abe sparked anger in China by paying his respects at a Tokyo shrine that honors Japan's war dead, including World War II leaders convicted as Class A war criminals.

While Japan is not a claimant in the South China Sea, it has provided support to the coast guards and militaries of some South-east Asian nations and told China all parties should act peacefully and in accordance with international law.

Japan described the July Hague court ruling that rejected China's claims in the region as "final and legally binding" and urged the parties to comply.

Even as disputes remain over territory, there are signs of cooperation, especially on trade. The nations have much room for cooperation despite some competition, Chinese ambassador to Japan Chen Yonghua said in an August interview with domestic Chinese media.

"The broad prospects for mutual beneficial cooperation are not changed," said Mr Chen. "China and Japan should work together to make a bigger cake of cooperation."