China and Japan have agreed to try to reduce tensions over a disputed chain of islands in the East China Sea.
Beijing officials said a crisis management mechanism had been set up to prevent the situation from worsening.
The strategically important islands, known as Diaoyu by China and Senkaku by Japan, are controlled by Japan.
It is a diplomatic breakthrough which media reports say could lead to a meeting between Japanese PM Shinzo Abe and Chinese President Xi Jinping.
The reports suggest they may meet on the sidelines of the Apec summit in Beijing next week.
If it happens the meeting will be the first proper exchange between the two leaders since they came to power, in 2012 and 2013 respectively.
The Chinese foreign ministry said in a statement that senior Chinese and Japanese officials had reached a four-point agreement, which included a recognition of their "different positions" over the islands.
They had agreed "to prevent the situation from aggravating through dialogue and consultation and establish crisis management mechanisms to avoid contingencies", the statement added.
The dispute over the islands has become particularly acrimonious over the last two years.
The BBC's Martin Patience in Beijing says it has inflamed nationalistic sentiment in both countries and damaged economic ties.
The islands are close to important shipping lanes, offer rich fishing grounds and lie near potential oil and gas reserves.
In 2012 Japan moved to purchase the islands from their private owners, sparking violent anti-Japanese protests in China.
In November 2013, China announced the creation of a new air defence identification zone, which would require any aircraft in the zone - which covers the islands - to comply with rules laid down by Beijing.
Japan labelled the move a "unilateral escalation" and said it would ignore it.
The two countries also differ over Japan's actions in China during World War II.
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