China soothes strains with Japan as APEC summit begins China is seeking to present a positive face and limit potential disagreements as leaders arrive for the Asia-Pacific Economic Cooperation (APEC) summit, which is taking place in Beijing over the next few days. It is reported to have agreed with Japan to find ways to keep the lid on a long-running dispute over a group of uninhabited islands. The two countries will gradually resume political, diplomatic and security dialogue, China's foreign ministry said in a statement following a meeting between China's top diplomat, Yang Jiechi, and Japanese Prime Minister Shinzo Abe's national security adviser, Shotaro Yachi. China and Japan acknowledge that "different positions exist between them" regarding tensions over the East China Sea islands, known as Senkaku in Japan and Diaoyu in China. But Japan must face up to and properly handle sensitive issues such as history and the islands, Yang was quoted as saying in a statement. The Chinese are also cooling the rhetoric on trade disputes and their backing for a new multilateral bank seen as a rival to US-backed institutions. But other sources of conflict loom beyond their control. The issue of Ukraine could pit Barack Obama against Vladimir Putin. Australia's prime minister Tony Abbott has vowed to confront the Russian leader over what he calls the "murder" of Australians in the downing of Malaysia Airlines flight MH17. Under President Xi Jinping's leadership the APEC summit is the first big international event China has hosted. It is being treated as "this year's Olympics" according to one Beijing-based diplomat. The summit is certainly the most important event the city has held since the 2008 Games. In an effort to make sure Beijing's notorious smog doesn't mar proceedings, some factories as far as 200 kilometres away are being closed. Driving restrictions are being introduced in the capital and neighbouring cities to reduce traffic and cut air pollution.