"We hope Japan will work with China to overcome the political obstacles and get bilateral relations back on track," Chinese State Councilor Tang Jiaxuan said in a meeting with Toranosuke Katayama, secretary general of Japan's governing Liberal Democratic Party in the House of Councilors.

    "It is in the fundamental interests of the two countries to maintain the sound development of China-Japan ties," Tang said, adding the sound bilateral ties are good for regional and world peace, stability and development.

    Chinese President Hu Jintao had explained China's policy on China-Japan relations on March 31 in a meeting with the heads of seven Japan-China friendship organizations.

    Hu made it clear that the major obstacle in China-Japan relations was the Japanese leaders' insistence on visiting the shrine which honors Japan's war dead, including 14 class A war criminals.

    "Hu's remarks signified the positive attitude China has displayed towards mending its ties with Japan," Tang said.

    As close neighbors having shared cultures, Japan and China can work together in various fields, Katayama said. "Japan-China friendship is in the interests of the two peoples and it can work for peace in the Asia-Pacific region."

    Chinese Vice Foreign Minister Wu Dawei was present at the meeting.

    Also on Friday, Wu and Japanese Ambassador to China Yuji Miyamoto signed a document on Japanese yen loans to China in the financial year of 2005.

    In March, the Japanese government froze the annual disbursement of loans to China for the fiscal year 2005. But earlier this month, the Japanese government decided to unfreeze the aid.

    The 74.798-billion-yen loans will be used in 10 projects in China, involving environment protection, human resource development and education, according to the Foreign Ministry. Enditem