Japan's foreign minister urged China on Sunday to reopen talks on developing natural gas deposits off islands claimed by both countries.
His Chinese counterpart, however, said tensions must cool before things can move forward, a Japanese Foreign Ministry official said on condition of anonymity, citing protocol.
Relations between China and Japan have been strained over a collision between a Chinese trawler and two Japanese patrol vessels near the disputed islands in the East China Sea two months ago.
China's Yang Jiechi met with Japan's Seiji Maehara on the sidelines of the Asia-Pacific Economic Cooperation forum, saying the two sides must properly handle sensitive issues. He did not elaborate.
In the wake of the Sept. 7 boat collision, Beijing cut off ministerial-level contacts with Japan, repeatedly summoned Tokyo's ambassador to complain and postponed talks on the joint development of the undersea natural gas fields. China also quietly halted exports to Japan of rare earth metals, which are essential for making high-tech products.
But on Saturday, Japan's trade minister Akihiro Ohata told reporters that his Chinese counterpart promised the "proper handling" of rare earth shipments. Ohata said he was confident that the Chinese rare earth imports to Japan would be normalized.
Ohata had warned Beijing of bringing the case to the World Trade Organization, but said he was no longer considering such a step.
The disruption of rare earths shipments has served as a wake-up call to Japan and the rest of the world.
Japanese Prime Minister Naoto Kan and Canadian Prime Minister Stephen Harper agreed Sunday to step up cooperation in areas including energy and the development of rare earths in resource-rich Canada.