Article, 20101115, "China, Japan Say Relations Thawing "contributed by Kyung Jin Lee

·        BUSINESS

·        NOVEMBER 15, 2010

China, Japan Say Relations Thawing

-Kyung Jin, Lee-

The Wall Street Journal

By CHESTER DAWSON And AARON BACK

YOKOHAMA, Japan—The leaders of China and Japan signaled over the weekend that icy bilateral relations between Asia's largest economic and political powers are slowly thawing, after several weeks of tension triggered by an incident involving a longstanding territorial dispute.

Japanese Prime Minister Naoto Kan said that he and Chinese President Hu Jintao agreed to strengthen ties between their two nations at a bilateral meeting on the sidelines of the weekend's Asia-Pacific Economic Cooperation, or APEC, forum in Yokohama.

"We confirmed that we will promote our strategic relationship of mutual benefit," said Mr. Kan at a press conference Sunday. "I think we were able to bring the general direction to the time when I took office in June," he added.

The Chinese Ministry of Foreign Affairs issued a statement late Saturday echoing that general sense of optimism, saying that Mr. Hu called for keeping relations with Japan "on a healthy and stable track."

Despite the many issues at hand—or perhaps because of them—the meeting between Messrs. Kan and Hu appeared to have been arranged hastily and lasted less than half an hour. The meeting, which at its beginning was televised, opened with the Japanese leader stiffly reading a prepared statement. Japanese officials went out of their way to portray the session as "very cordial," but it took the Chinese side several hours to confirm that it took place.

There was no sign of compromise on the territorial dispute or other key bilateral issues, which seemed to underscore the depth of the discord. "We made clear our basic position that there is no territorial dispute in this region," said Mr. Kan, indicating that Japan doesn't consider China's territorial claims to the group of island at the center of the latest flare-up to be valid. The islands are under Japanese administration.

None of that matched the positive rhetoric and friendly body language evident between Tokyo and Washington at the weekend forum. But it was a marked shift from the rhetorical broadsides over the past two months.

The Sino-Japanese summit was the first such formal meeting since a Chinese fishing trawler collided with a Japanese coast guard cutter in September. The collision, which occurred near the islands, triggered a diplomatic freeze and a chilling of the broader relationship between the two major trading partners.

In a speech to APEC leaders earlier on Sunday, Mr. Hu didn't bring up his meeting with Mr. Kan or address Sino-Japanese relations more broadly. But China's leader did say his nation remains committed to "the regional policy of building good-neighborliness and friendship," according to text of the speech released by the Chinese delegation. Mr. Hu on Saturday also reiterated a pledge to allow exports of crucial minerals known as rare earths to Japan, according to a Japanese foreign ministry official.

Some regional government and business leaders said they hoped China and Japan would be able to put the dispute behind them. Speaking at a meeting of business leaders in Yokohama on Saturday, Singapore Prime Minister Lee Hsien Loong said the territorial issue is "an old problem that is not going away anytime soon." Mr. Lee called upon the two countries to move beyond it in order to improve their broader ties. "The challenge is to manage this without carrying into the overall relationship and souring the overall mood," he said.

Several business leaders in attendance agreed. "That group of islands has always been an issue and probably always will be," said Junichi Ujiie, chairman of Nomura Holdings Inc. "Geopolitics can become a hot potato from time to time, but trade is a mutually beneficial path that must continue to be pursued."

Japanese Prime Minister Kan has faced criticism from opposition politicians and protest groups for his government's decision to release the Chinese fisherman under diplomatic pressure from China. Mr. Kan's administration has also been under fire for refusing to release videos of the sea clash, which were then illicitly leaked and posted online.

As a result of a growing sense of Tokyo's mishandling of its response to the incident, the six-month old government's public approval rating has plummeted. An Asahi newspaper poll showed that Mr. Kan came into office with the support of about 60% of Japanese registered voters, but a Kyodo News survey showed that falling to 32.7% as of earlier this month.

The APEC conference attracted demonstrations by Japanese protesters unhappy with China's position on a number of issues, including the disputed islands, which are known as the Senkaku in Japan and Diaoyu in China. On Saturday, the cries of thousands of protestors could be heard echoing outside the Yokohama convention center, even though they were kept several blocks away from the meeting site.

On Sunday morning, a smaller group of about 100 demonstrators wearing placards with anti-China slogans were gathered around a small sound truck equipped with bullhorns.

"China is now trying to dominate first of all the South China Sea, then the East China Sea, including the Senkaku islands," said protestor Katsuhiko Umehara, a former mayor of the northern Japanese city of Sendai. "The reaction of the government of Japan is so weak," he said.

The formal summit between the Chinese and Japanese leaders came after a delicate diplomatic dance over the past several weeks.

Last month, Mr. Kan and Chinese Premier Wen Jiabao were supposed to confer during a meeting of Southeast Asian leaders in Hanoi, but the planned session was abruptly cancelled by the Chinese side at the last minute. Instead, Messrs. Kan and Wen had an informal talk for about 10 minutes in a waiting room before the Association of Southeast Asian Nations summit began.

Earlier in October, the two leaders had a chance meeting at an Asia-Europe forum in Brussels. Messrs. Kan and Wen passed each other in a hallway as they were leaving a working dinner and sat down to talk briefly, according to an account by a Japanese government official.

—Kana Inagaki and Takashi Nakamichi contributed to this article.