The talks on Saturday came a day after Prime Minister Junichiro Koizumi, at a summit of Asian and African leaders in the Indonesian capital, made an unusually public apology for Japan's past atrocities in Asia.
Ties between the Asian giants had deteriorated to their worst since the normalisation of relations in 1972, putting at risk economic links worth $212 billion in annual trade.
"If the appearance of serious problems in Sino-Japanese relations is not handled properly ... not only will it be
detrimental to China and Japan, but it will also affect the stability and development of Asia," Hu said.
"Remorse expressed for the war of aggression should be translated into action."
Koizumi said he had a meaningful exchange with Hu, adding that the two had agreed not to debate Japan's wartime history or visits by Japanese politicians to a controversial war shrine in Tokyo, both sources of much of the friction.
"Remorse expressed for the war of aggression should be translated into action"
Stand on Taiwan
"We were able to confirm at the meeting that rather than criticising each other's past shortcomings and aggravating antagonistic feelings, we should make efforts to develop the bilateral friendship," Koizumi told a news conference after the one-hour talks on Saturday.
"The Japan-China friendship is beneficial not only for the two countries but also for Asia and the international community," he said.
Hu said differences between the countries needed to be resolved through dialogue. Japan needs to meet its commitments not to support the independence of Taiwan, which China regards as a renegade province, Hu added.
There have been violent anti-Japan demonstrations in China over school history textbooks that critics say sugarcoat its wartime history and over other irritants, including Tokyo's campaign for a permanent seat on the UN Security Council.
China witnessed anti-Japan
protests over Japanese texts
Beijing says 35 million Chinese were killed or wounded during Japan's 1931-45 occupation of much of the country.
Hu and Koizumi shook hands as they met in a ballroom, Koizumi using both hands but appearing relaxed while Hu was stiff and expressionless. When they sat opposite each other at a long table, Koizumi told Hu about his trip earlier in the day to the tsunami-hit province of Aceh.
"I went to Aceh province today," he said. "I saw that a roof of a two-storey building had been destroyed by the tsunami and realised how tall the waves were," Koizumi said before reporters were ushered out of the room.
On Friday, while addressing 100 Asian and African leaders, including Hu, Koizumi apologised for the "tremendous damage and suffering" caused by Japan's wartime actions.
Asked earlier in Aceh about Chinese government comments that action was more important than words, Koizumi said:
"In the last 60 years, we have become an economic superpower and not a military state. (We are a) peaceful nation reflecting on the experience of the war."
UN Secretary-General Kofi Annan, also in Jakarta for the Asia-Africa gathering, said he was delighted Koizumi and Hu would meet and hoped it would reduce the "temperature". Koizumi's apology had helped, he said.
Kofi Annan said the Japanese
leader's apology was helpful
"The statement by Mr Koizumi, I believe, has been well received not only here but I think around the world and I think it has also set the stage appropriately for (their) meeting," Annan told a news conference.
But in a sign of how easily ties can be affected, a Japanese cabinet minister and 80 other parliamentarians paid their respects on Friday at the Yasukuni Shrine in Tokyo that has become a symbol of the animosity, prompting an angry response from Beijing.
Relations with China chilled markedly after Koizumi took office in 2001 and began annual visits to the shrine. He has not visited this year, though.
China launched a campaign to cool tempers this week. It dispatched veteran diplomats to give lectures on the history as well as the benefits of Sino-Japanese ties to Communist Party members and officials as well as university students, who were urged to focus on their studies.
Police had issued a strong warning on Thursday that those who took part in unauthorised protests would be punished.