China and Japan have agreed to resume talks over foreign policy and security issues in an agreement that significantly raises the chances that President Xi Jinping and Prime Minister Shinzo Abe will meet for the first time next week at the Asia-Pacific Economic Cooperation forum in Beijing.

The Japanese foreign ministry said both sides had agreed to disagree on the issue of the Senkaku Islands – a chain in the East China Sea that Japan controls but China claims and calls the Diaoyu – but that they would create a mechanism to prevent the situation from deteriorating. Xinhua, the official Chinese news agency, also said that the nations had reached agreement over resuming dialogue.

After two years of frozen relations, the deal paves the way for a possible meeting between Mr Abe and Mr Xi. The two leaders have not met since they both assumed power in late 2012. Two people familiar with the situation cautioned that final agreement had not been reached on a meeting, but one said the deal created an "environment for [a] summit".