In the runup to the Apec meeting in Beijing, we mentioned how China's relations and trading ambitions with Japan and Korea were going to be a big issue at the summit, and we weren't disappointed.

Chinese president Xi Jinping held his first meeting with Japanese prime minister Shinzo Abe at the summit. Their expressions were sour, and the body language needed a lot of work, but the first meeting by the leaders of the world's second- and third-largest economies in three years could be a sign of improved relations on the horizon.

Tensions between Japan and China over disputed islands in the East China Sea and Tokyo's perceived failure to atone properly for second World War atrocities have fuelled the defining regional conflict of the past few years.

While the two countries are major trading partners, these political tensions are proving bad for business between them. So far this year, foreign direct investment from Japan is down 43 per cent.

The two countries have signed a four-point agreement to improve regional ties and Mr Abe said there needed to be more co-operation between the two neighbours.

“Japan and China, we need each other. We are in a way inseparably bound with each other . . . Japan and China both have responsibility for the peace and prosperity of the region and of the world,” he said.

China-South Korea deal

In talks with South Korea, there was also significant progress, as Beijing and Seoul effectively concluded a free-trade deal, the culmination of two years of negotiations, which will cover 17 areas, including high-end electronics, e-commerce and leisure goods, although it does not cover rice and vehicles.

Mr Xi announced the conclusion of talks with his South Korean counterpart, Park Geun-hye, at Apec and, under the terms of the deal, more than 90 per cent of all South Korean and Chinese goods currently being traded will be free of tariffs immediately or within 20 years of the pact taking effect. China is the world’s largest exporter, while South Korea is the seventh-biggest.