Mahmoud Abbas, the president of the Palestinian Authority, and Binyamin Netanyahu, the Israeli prime minister, are both visiting China and will separately hold talks with senior government officials.
Abbas, who arrived on Sunday, met his host President Xi Jinping on Monday during a welcome ceremony in Beijing.
The two presidents inspected the guard of honour on the Tiananmen Square before a meeting in the Great Hall of the People.
Abbas, whose trip will last three days, later met with Li Keqiang, the Chinese prime minister.
Netanyahu arrived on Monday in the commercial capital of Shanghai, where he will meet business leaders, and fly to Beijing later for talks with Chinese leaders. It is not clear whether Netanyahu will meet Abbas.
Xi praised Abbas for his role in leading the Palestinian people to important achievements and vowed to have a thorough exchange of views with his counterpart.
Abbas told Xi that bilateral relations have continued to develop since China became the first country to set up an office on the Palestinian territory in the 1960s.
The two leaders witnessed the signing of a framework for economic cooperation and an agreement for cultural exchanges between the two governments from 2013 to 2016.
China has traditionally had a low profile in Middle East diplomacy, but is keen to assert its role as a key player in international politics.
It has tried on and off over the years to mediate in the Israeli-Palestinian issue but with little apparent success.
In an interview on Friday with Xinhua, China's state news agency, Abbas said he would let the Chinese leaders know the barriers currently rooted in the Palestinians' talks with Israel.
He also said he would urge the Chinese leadership "to use its relationship with Israel to remove the obstacles that obstruct the Palestinian economy".