Japanese Prime Minister Junichiro Koizumi and Chinese President Hu Jintao smiled and shook hands before sitting down to begin the talks, which were closed to the media.
The meeting is the first top-level discussion since massive anti-Japanese protests erupted earlier this month in major Chinese cities over Tokyo's approval of school textbooks that China claims play down wartime atrocities.
It comes a day after Koizumi offered the most public apology in a decade over Japan's wartime aggression in Asia. Koizumi's expression of "deep remorse" broke no new ground, but the rare appeal was a clear attempt to reverse the worst erosion of ties between Tokyo and Beijing since diplomatic relations were established in 1972.
Saturday's meeting took place on the sidelines of a summit for Asian and African leaders in Jakarta.
Koizumi told reporters during a brief visit to the tsunami-hit province of Aceh that he hoped to stress the importance of amiable Japan-China relations during his meeting with Hu.
"There is a saying 'to turn misfortune into a blessing.' All countries have confrontations, but in the long-term it is in both countries' interests to overcome confrontation and to expand friendly relations," he said.
The meeting comes after huge
anti-Japanese protests in China
"At the meeting, I would like us to share the recognition that friendly Japan-China relations are important," said Koizumi.
Chinese Foreign Ministry spokesman Kong Quan said Beijing believed that good ties with Japan were vital.
"We attach emphasis on developing neighbouring, friendly and cooperative relations with Japan," he said. "We hope leaders of the two countries can ... eliminate the negative impacts created by Japan's erroneous actions so that Sino-Japanese relations can move forward smoothly on a healthy foundation."
China, South Korea and other Asian nations have long accused Japan of not apologising adequately for invading and occupying its neighbours, and Chinese animosities are aggravated by their rivalry with the Japanese to be the region's dominant power.
At least 12 million Chinese citizens died in Japan's assault on their nation in the 1930s and 40s. Japan, an ally of Nazi Germany, conquered much of East Asia before its forces surrendered in August 1945. Atrocities include mass sex slavery and germ warfare.
The talks took place on the
sidelines of a summit in Jakarta
The dispute has threatened Japan's bid for a permanent seat on the UN Security Council. During a visit to India earlier this month, China's prime minister told Japan to face up to its second world war aggression before aspiring to a bigger global role.
It was the strongest hint yet that China might exercise its veto as one of the council's five permanent members to block Japan.
At the start of the summit on Friday, Koizumi expressed "deep remorse" for his country's misdeeds. It marked the first statement of remorse from a Japanese leader since 1995.
"In the past, Japan through its colonial rule and aggression caused tremendous damage and suffering for the people of many countries, particularly those of Asian nations," Koizumi said, conveying Tokyo's "heartfelt apology" for its conquests.
"Friendly Japan-China relations are important"
Japanese Prime Minister Junichiro Koizumi
"Japan squarely faces these facts of history in a spirit of humility," he said.
However, Koizumi's remarks came just hours after a Cabinet minister and more than 80 Japanese lawmakers visited a Tokyo shrine to Japan's war dead.
China said rhetoric alone would not mend the rift. In Tokyo, about 150 protesters, many of them Japanese nationalists, on Saturday marched peacefully to protest against anti-Japanese violence in China.
Brandishing rising sun Japanese flags, the protesters chanted "Chinese government: Crack down on anti-Japan violent protests" and "Chinese government: Formally apologise to Japan".
In Beijing, there was no sign of new anti-Japanese protests on Saturday, a day after the government called on the public to end unrest that might damage economic ties.
Three busloads of paramilitary troops guarded the Japanese Embassy.
A spokesman for Chinese nationalist groups that helped to mobilise earlier protests said he knew of no plans for protests this weekend.
"The Chinese people have already done a good job of letting Japan and the world know how we feel," Lu Yunfei said.