Premier Wen Jiabao held talks with his Japanese counterpart Junichiro Koizumi on the sidelines of the Association of Southeast Asian Nations (ASEAN).
The major obstacle now is on politics and the core problem is the Japanese leader's visit to the shrine, said Wen.
"How this issue is handled will directly influence the development of bilateral relations," Wen was quoted as saying in the meeting by a Chinese Foreign Ministry spokesman.
"The person who started the trouble should end it," Wen was quoted, echoing a traditional Chinese saying in his meeting with the Japanese leader.
Koizumi has visited the shrine each year since taking office in 2001. The shrine houses 14 Class-A World War II criminals and is seen as the symbol of Japan's militaristic past.
"We hope that the Japanese leader can proceed for overall China-Japan ties and deal with this issue correctly, and not disturb hard-won Sino-Japanese relations," Wen was quoted as saying.
One principle for guiding China's relations with Japan is known as "taking history as a mirror and facing the future."
This means the two countries should treat history correctly and as a foundation stone of bilateral friendship, according to Wen.
He emphasized that China and Japan share many common interests and must promote bilateral relations from "long-term" and "strategic" perspectives.
China and Japan must develop their friendship and this is the popular sentiment and general course of development, said Wen, adding that it is also the knowledge guided by history.
Koizumi said the two countries have made progress in economic and trade co-operation as well as in cultural and non-official exchanges.
The friendship between the countries is good for both sides, he noted.
Japan's invasion brought disastrous consequences to the Chinese people, and it should conduct a self-examination of history and will not launch warfare again, said Koizumi. He said that Japanese youth must also have such knowledge and that Japan must develop friendly relations with China.
Besides Koizumi, Wen also held separate meetings with Indian Prime Minister Manmohan Singh, New Zealand Prime Minister Helen Clark, Australian Prime Minister John Howard and President of Lao National Assembly Samane Viyaketh Tuesday.
On Monday, he met separately with Sultan Haji Hassanal Bolkia of Brunei, President of Philippines Gloria Macapagal Arroyo and Prime Minister of Myanmar Soe Win.
(China Daily December 1, 2004)
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