• Bloomberg, Kyodo

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The leaders of China and Japan are to meet on the sidelines of the Group of 20 summit in Hangzhou, China, on Monday amid soaring tensions over the Senkaku Islands in the East China Sea.

Chinese President Xi Jinping and Prime Minister Shinzo Abe will exchange their thoughts — not just a handshake — at a sit-down meeting in the evening, according to an official familiar with the plan who asked not to be identified, citing government policy.

Asia’s two largest economies have long bickered over territorial disputes and Japan’s wartime history, but things have taken a turn for the worse in recent months, even as trade and tourism numbers have held up.

Beijing has taken a more assertive approach to the Japan-administered Senkakus, sending greater numbers of vessels near the uninhabited islets in the East China Sea and triggering a flurry of protests from Tokyo.

“It’s a good opportunity for both nations as they face economic downturn pressure domestically,” said Liu Jiangyong, director of international relations at Tsinghua University in Beijing, referring to the meeting. “An improved relationship is needed by both China and Japan.”

Ahead of that, Abe and Xi shook hands as Xi greeted the G-20 leaders at the start of the summit on Sunday. Xi gave a brief smile, while a more relaxed-looking Abe flashed a grin and appeared to laugh a little. During a leaders’ photograph, Abe stood in the middle row, to the back and several places to the left of Xi.

During prior consultations on the Abe-Xi meeting, Beijing had said it does not want the South China Sea and Senkaku issues to be discussed for more than half the meeting, which is expected to last about 30 minutes.

Chinese officials also asked Japan to refrain from making remarks that could suggest all the blame for the acrimony should rest on Beijing, sources said.

Arguing that the main topic of the G-20 summit should be the global economy, Beijing also said the South China Sea issue had been discussed among the parties involved and arguments that the rule of law is the “absolute truth” are not acceptable, they added.Withholding criticism against China as much as possible, Abe also appears leaning toward eliciting results such as an early start of a “Maritime and Aerial Communication Mechanism” between the two countries’ defense officials. Such a mechanism would help to reduce the possibility of unintended clashes between their vessels at sea.

If such a plan unfolds, Abe would likely instead raise the maritime issues at regional meetings involving the Association of Southeast Asian Nations in Laos slatted to kick off Tuesday, the sources said.

The two leaders joined other heads of G-20 nations at the summit later Sunday, but any sideline meeting would be the first since a brief chat during the Asian African Conference in Jakarta in April last year.

The first time Abe and Xi formally met, at the Asia-Pacific Economic Cooperation forum in Beijing in late 2014, it proved to be a brief and awkward affair, with the pair sharing an uneasy handshake after nearly 2½ years of frosty relations.

Sino-Japanese ties had hit a particularly icy patch in 2012, when Japan nationalized three of the Senkaku islets and China announced an air defense identification zone over the waters in late 2013. Tensions also spiked after an international arbitration court ruling in July that invalidated most of China’s “historic claims” to the South China Sea.

Ahead of the ruling in late June, Beijing issued a strongly worded warning to a high-level Japanese official that Tokyo should not send the Self-Defense Forces to join U.S. operations near disputed islands in the South China Sea, sources said late last month.

Japan will “cross a red line” if SDF vessels take part in so-called freedom of navigation operations, Ambassador Cheng Yonghua told the official, the sources said. Cheng even hinted at military action.

The warning was issued not long before the international tribunal ruling on July 12.

While Japan is not a claimant in the South China Sea, it has supported some Southeast Asian nations and urged all parties to abide by the ruling. China has accused Japan of meddling in its affairs.

The latest tensions haven’t dented Chinese tourism to Japan — 731,400 visited in July, a monthly record — or impacted trade. But they further complicate ties, as well as add to the risk of a physical clash, just as their economies are facing headwinds.

During the G-20 meeting, Abe called on fellow leaders to take specific actions to accelerate growth, citing heightening downside risks as the outlook for the global economy remains hazy amid uncertainty.

The focus of the two-day gathering will be whether advanced and emerging economies can work out detailed growth strategies. China, as conference host, aims to exercise strong leadership in moving discussions forward.

“In the face of the current challenges, we should strengthen macroeconomic policy coordination and work together to promote global economic growth and maintain financial stability,” Xi said in his opening remarks.

During the G-20 summit through Monday, the leaders will also focus on such themes as innovation and growth, more efficient global economic and financial governance, and strong international trade and investment, Xi said.

Abe explained his government’s ¥28 trillion ($270 billion) economic stimulus package adopted in August to boost growth, centering on infrastructure investment and enhanced welfare services, and urged other leaders to “take specific actions.”

“It is important for the entire G-20 to share a sense of crisis and take specific actions,” Abe was quoted as saying by a Japanese official. “Advanced and emerging economies must unite and bring the global economy back onto a recovery path,” he said.

The G-20 groups Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the U.S. and the European Union.

Since the G-7 summit in Mie Prefecture, global economic concerns have included not just the fallout from Britain’s vote in June to exit the European Union, but also uncertainty over the outlook for emerging economies and an oversupply of resources, notably Chinese steel exports.

European Union leaders called Sunday for China to take action on its bloated steel industry and defended an order to Ireland to collect taxes from Apple, highlighting the trade tensions looming over a global economic summit.

The G-20 meeting “must urgently find a solution” to excess steel production, said Jean-Claude Juncker, president of the European Commission. He called on Beijing to accept a monitoring mechanism for overproduction that Beijing’s trading partners blame for low prices and job losses.

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