Chinese President Xi Jinping and Japanese Prime Minister Shinzo Abe took a tentative step towards improving their countries’ strained relations Monday, meeting each other for the first time since they took office two years ago.

After an awkward handshake for the cameras, the two leaders spoke in private for 25 minutes, heralding a long-anticipated thaw in a relationship that has been so bad recently it had sparked fears of a military clash between the two largest powers in Asia that could have escalated.

The landmark talks, on the margins of the Asia Pacific Economic Cooperation summit in Beijing, “are a turning point, but only a starting point,” says Wang Chong, an expert on Sino-Japanese relations at the Charhar Institute, an independent think tank in Beijing.

Since the two leaders did not discuss any substantive issues, ties between the two governments “will take quite a long time to recover,” Mr. Wang predicts.

For the past 30 months China and Japan have been wrangling intensely over the ownership of a group of islands in the East China Sea known here as the Diaoyu and in Japan as the Senkaku. Beijing was also incensed over a visit Mr. Abe made last year to the Yasukuni Shrine in Tokyo, which honors World War II war criminals among other war dead.

Monday’s meeting, which Japanese diplomats had been trying to engineer for months, came after the two sides pledged in a joint statement last Friday to “gradually resume political, diplomatic and security dialogue…and to make efforts to build mutual political trust.”

The four point communiqué was “a first step, not a goal,” says Atsushi Ueno, head of the China desk at the Japanese foreign ministry. “We should make efforts to continue to improve relations.” Indeed, the statement gave no indication that Japan and China are any closer to agreement on the substance of their disputes.

Instead, it was a masterpiece of creative ambiguity, allowing both Mr. Xi and Abe to say they had made no concessions while at the same time setting the territorial dispute aside.

Beijing had insisted that there would be no meeting unless Japan acknowledged that there is a dispute over who has sovereignty over the Diaoyu islands. But the joint statement does not go that far. Tokyo only “recognized that they had different views as the emergence of tense situations…around the Senkaku islands.”

Nor did Abe explicitly promise not to make any more visits to the Yasukuni Shrine – another Chinese precondition – though that was implied in Japan and China’s pledge to “squarely face history and advance towards the future,” according to sources familiar with the negotiations.

Ambiguities abound in joint statement

Chinese observers, however, are painting the four point statement as a victory for Beijing. “There are some ambiguities in the language, but the meaning is clear,” says Guo Dingping, who teaches international relations at Fudan University in Shanghai. “If Japanese officials are denying [that Tokyo has acknowledged a territorial dispute] it is only so as not to put Shinzo Abe in a difficult position.” For their part, Japanese diplomats say this isn't the case.

The agreement, however differently it is interpreted in Tokyo and Beijing, “does give the two sides a way to manage their tensions and avoid more conflict” by taking their diplomatic relations out of the deep freeze, says Mr. Wang.

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The thaw is expected to lead to talks on setting up a military hotline between the two neighbors and a crisis management system to defuse any accidental incidents at sea or in the air near the Diaoyu islands, where both countries regularly deploy maritime and air patrols.

A turnaround in ties could encourage Japanese companies to return to China after having been frightened away by China's increasingly strident anti-Japanese tone in recent years. Japanese direct investment in China for the first eight months of this year fell by 43 percent from levels a year earlier, according to official Japanese trade figures.