10 November 2014
Last updated at 02:29 ET
The talks are the first between the two leaders. Mr Abe said it was the first step to "improving ties".
Relations have been soured by the row over islands in the East China Sea.
The strategically important islands, known as Diaoyu by China and Senkaku by Japan, are controlled by Japan.
Tokyo's decision to purchase three of them from their private Japanese owner in September 2012 led to an escalation in a dispute that has rumbled quietly for years.
Analysis: Carrie Gracie, BBC China editor After two years of Chinese animosity towards Japan's new prime minister, President Xi has finally relented.
Today's face-to-face meeting with Shinzo Abe is important progress in relations between the world's second and third largest economies.
But the underlying disagreements over territory and history remain as bitter as ever. And even Mr Xi's body language at today's meeting was calculatedly icy.
During the handshake he did not smile or respond to Mr Abe's attempt at conversation.
For all the fireworks and group photographs, this summit brings together neighbours with different worldviews at a difficult moment in history.
China has also complained about what it sees as Japan's failure to adequately acknowledge its war-time actions and has been angered by visits by Japanese lawmakers - including Mr Abe - to the Yasukuni shrine that commemorates Japan's war dead, including convicted war criminals.
The two national leaders interacted awkwardly as they posed for an unsmiling photo after the talks.
Mr Abe said the meeting - which came three days after the two sides agreed to work to prevent the territorial dispute from escalating - was "the first step for improving ties by returning to mutually beneficial relations based on common strategic interests",
He also said the two countries had agreed to start preparations to establish a maritime crisis mechanism.
There have been fears that a clash - accidental or otherwise - between Chinese and Japanese paramilitary vessels patrolling waters around the disputed islands could trigger a conflict.
Mr Xi told Mr Abe that "historical issues concern the feelings of more than 1.3 billion Chinese people" and that China hoped Japan would follow a path of peaceful development and adopt prudent military and security policies.
Japan's Deputy Chief Cabinet Secretary Katsunubo Kato said there was no direct mention of the Yasukuni shrine or of the disputes islands during the half-hour talks.
Trade agenda The meeting came with leaders from the 21 Apec member-nations in the Chinese capital for two days of talks.
Bilateral meetings between top leaders are taking place on Monday, followed by a formal leaders' summit on Tuesday.
The summit takes place as China looks to underline its growing status as regional leader and economic giant.
It is the biggest event hosted so far by Mr Xi, who took over the Chinese presidency in March 2013, and trade is one of the top priorities.
The US will be pushing its Trans-Pacific Partnership (TPP), a 12-nation economic framework along the Pacific Rim which currently excludes China.
It is the economic aspect of America's "Asia rebalance", which some experts say is aimed at countering China's growing influence in the region.
China, however, will be trying to shore up support for its own separate free-trade agreement, the Free Trade Area of the Asia-Pacific.
Both US President Barack Obama and Russia leader Vladimir Putin are attending and will deliver speeches later in the day.
But the two men are not expected to hold talks, amid frosty ties over Russia's support for separatists fighting in eastern Ukraine.
Australian leader Tony Abbott, however, says he is seeking a "robust conversation" with Mr Putin over MH17, the Malaysia Airlines plane brought down by a missile over Ukraine.
Talks would focus on "our absolute expectation that Russia will be as good as its word, that it will fully co-operate with the investigations that are underway and that it will do what it can to ensure that justice is done", Mr Abbott said.
The plane is believed to have been hit by a surface-to-air missile fired from an area controlled by pro-Russian rebels. Russian officials have denied the allegations.
In other early summit developments:
by Xian Wan and Biodun Iginla, BBC News Website
The leaders of China and Japan have met for formal talks after more than two years of severe tension over a territorial dispute.
Chinese President Xi Jinping and Japanese PM Shinzo Abe met
on the sidelines of the Asia-Pacific Economic Co-operation (Apec) summit
in Beijing.The talks are the first between the two leaders. Mr Abe said it was the first step to "improving ties".
Relations have been soured by the row over islands in the East China Sea.
The strategically important islands, known as Diaoyu by China and Senkaku by Japan, are controlled by Japan.
Tokyo's decision to purchase three of them from their private Japanese owner in September 2012 led to an escalation in a dispute that has rumbled quietly for years.
Analysis: Carrie Gracie, BBC China editor After two years of Chinese animosity towards Japan's new prime minister, President Xi has finally relented.
Today's face-to-face meeting with Shinzo Abe is important progress in relations between the world's second and third largest economies.
But the underlying disagreements over territory and history remain as bitter as ever. And even Mr Xi's body language at today's meeting was calculatedly icy.
During the handshake he did not smile or respond to Mr Abe's attempt at conversation.
For all the fireworks and group photographs, this summit brings together neighbours with different worldviews at a difficult moment in history.
China has also complained about what it sees as Japan's failure to adequately acknowledge its war-time actions and has been angered by visits by Japanese lawmakers - including Mr Abe - to the Yasukuni shrine that commemorates Japan's war dead, including convicted war criminals.
The two national leaders interacted awkwardly as they posed for an unsmiling photo after the talks.
Mr Abe said the meeting - which came three days after the two sides agreed to work to prevent the territorial dispute from escalating - was "the first step for improving ties by returning to mutually beneficial relations based on common strategic interests",
He also said the two countries had agreed to start preparations to establish a maritime crisis mechanism.
There have been fears that a clash - accidental or otherwise - between Chinese and Japanese paramilitary vessels patrolling waters around the disputed islands could trigger a conflict.
Mr Xi told Mr Abe that "historical issues concern the feelings of more than 1.3 billion Chinese people" and that China hoped Japan would follow a path of peaceful development and adopt prudent military and security policies.
Japan's Deputy Chief Cabinet Secretary Katsunubo Kato said there was no direct mention of the Yasukuni shrine or of the disputes islands during the half-hour talks.
Trade agenda The meeting came with leaders from the 21 Apec member-nations in the Chinese capital for two days of talks.
Bilateral meetings between top leaders are taking place on Monday, followed by a formal leaders' summit on Tuesday.
The summit takes place as China looks to underline its growing status as regional leader and economic giant.
It is the biggest event hosted so far by Mr Xi, who took over the Chinese presidency in March 2013, and trade is one of the top priorities.
The US will be pushing its Trans-Pacific Partnership (TPP), a 12-nation economic framework along the Pacific Rim which currently excludes China.
It is the economic aspect of America's "Asia rebalance", which some experts say is aimed at countering China's growing influence in the region.
China, however, will be trying to shore up support for its own separate free-trade agreement, the Free Trade Area of the Asia-Pacific.
Both US President Barack Obama and Russia leader Vladimir Putin are attending and will deliver speeches later in the day.
But the two men are not expected to hold talks, amid frosty ties over Russia's support for separatists fighting in eastern Ukraine.
Australian leader Tony Abbott, however, says he is seeking a "robust conversation" with Mr Putin over MH17, the Malaysia Airlines plane brought down by a missile over Ukraine.
Talks would focus on "our absolute expectation that Russia will be as good as its word, that it will fully co-operate with the investigations that are underway and that it will do what it can to ensure that justice is done", Mr Abbott said.
The plane is believed to have been hit by a surface-to-air missile fired from an area controlled by pro-Russian rebels. Russian officials have denied the allegations.
In other early summit developments:
- China and South Korea have agreed to sign a bilateral free-trade deal which will remove or reduce most barriers to trade and investment between the two countries
- Ahead of the summit Russia and China signed a major gas deal, pledging greater "mutually fruitful co-operation"
- Beijing has also pledged $40bn (£25.2bn) to help Asian nations improve trade links
- The eight uninhabited islands and rocks have a total area of about 7 sq km
- They are close to strategically important shipping lanes - the waters also offer rich fishing grounds and are thought to contain oil deposits
- The islands are controlled by Japan
- China says they have been part of its territory since ancient times
- Separately, Taiwan also claims the islands
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From other news sites
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Guardian.co.uk Xi Jinping and Shinzo Abe meet for an ice-breaking summit 34 mins ago
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Reuters UK China's Xi, Japan's Abe hold landmark meeting after awkward handshake 38 mins ago
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The Scotsman Hopes raised for Japan and China to ease tensions 30 hrs ago
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Bangkok Post China, Japan ministers meet after deal to curb tensions 38 hrs ago
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