Japan, China make progress on gas feud at summit

By Chris Buckley

TOKYO (Reuters) - Japan and China announced progress towards settling a feud over gas in the East China Sea in a sign of warming ties between the big Asian rivals, and agreed at a summit on Wednesday that cooperation was their "only option".

Japanese Prime Minister Yasuo Fukuda also nudged visiting Chinese President Hu Jintao to continue talks with representatives of the Dalai Lama, Tibet's exiled Buddhist leader, after unrest in Tibet stirred protests around the world.

Hu said China's recent talks with the Dalai Lama's aides had been serious and were set to continue. But he also accused the Dalai Lama's supporters of seeking to wreck the Beijing Olympics in August. The Dalai Lama has rejected China's accusations.

Tibet was just one of the sticky problems aired at the summit aimed at easing antagonism between the two Asian powers, whose ties have long been marred by their bitter wartime past and disputes over energy, influence and military ambitions.

Standing stiffly beside each other, the two leaders hailed their friendship while tip-toing around contentious topics.

"We both believe relations between China and Japan are at a new starting point," Hu Jintao told the news conference. A day earlier he had offered a pair of pandas to Japan as a show of goodwill.

Fukuda said his country was praying for the success of the Beijing Olympics but that he had not decided whether to attend the opening ceremony. "If the situation permits, I will consider it positively," he said.

Both leaders have their own reasons for wanting a success from Hu's five-day stay, the first state visit by a top Chinese leader since 1998, when then-President Jiang Zemin delivered a series of sharp rebukes to Japan over its wartime actions, leaving both sides bitter.

Fukuda faces lowly public approval ratings that could force him from office, while Hu is eager to show Western critics that his country does not lack friends, political analysts have said.

BROAD PROMISES, REAL PROGRESS

In a meeting dominated by broad-brush vows to cooperate in diplomacy, economics and the environment and to exchange annual high-level visits, the two leaders said there was real progress in resolving the dispute over gas under the East China Sea.

"Prospects for settling the dispute are already in view and I'm happy about this," Hu said. "We have decided to continue consultations and reach an agreement as soon as possible."

Fukuda echoed Hu's upbeat comments, and Jiji news agency, quoting a senior Japanese official, said an agreement could be announced before the summer, when Hu is due to return to Japan for a G8 meeting.

The tussle over undersea gas reflects their rival worries about access to limited energy resources, and it is the bilateral dispute that could most easily spark military clashes.

Current estimated reserves in the East China Sea, where the disputed fields lie, are relatively modest but both sides expect a lot more oil or gas might be found in the area.