China and Japan have taken the first diplomatic step in easing tensions over a bitter territorial dispute that has damaged trade between the two countries and threatened to spill over into military conflict.

Xi Jinping, China’s new Communist party leader, and Natsuo Yamaguchi, a senior member of Japan’s ruling coalition, on Friday held the first high-level meeting between the neighbours since the dispute over a group of Japanese-controlled islands in the East China Sea erupted in September.

“We should, like the old generation of leaders in our two countries did, show national responsibility, political wisdom and historical courage,” said Mr Xi. He was referring to the decision in 1972 by Beijing and Tokyo to shelve disputes and normalise bilateral relations.