After two years of insisting it would not negotiate the Senkaku Islands, Japan finally caved this week in hopes of repairing relations with its economic partner, China.

Japanese officials have reportedly been making delicate behind-the-scenes diplomatic maneuverings to get China to make a symbolic act of good will-a handshake-signifying thawing strained relations over the disputed Senkaku Islands and Japan's alleged mishandling of its wartime history.

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The gesture is slated to take place on the sidelines of the Asia Pacific Economic Committee meeting next month in Beijing between Chinese President Xi Jinping and Japanese Prime Minister Shinzo Abe.

This would mark the first time, the leaders of Asia's economic giants will meet since taking office.   

The hand shake, and perhaps a short meeting afterward, comes after Japan agreed to recognize this week, that the uninhabited islands in east China Sea are in dispute.

Japan has long insisted its valid territory is not up for negotiations, but mounting economic pressure and threats of miscalculated clashes over the islands have compelled both countries to recognize that a truce will have to be made.

China's Commerce Ministry has earlier reported that Japan's direct investments in the country pummeled to about 50 percent during the first half of 2014 compared to the same period last year.

Japan's manufacturing sector has also dealt a massive blow after tensions over the disputed islands escalated last year, The New York Times reported.

According to observers, both leaders are loath of sparking bitter conflicts in their bid to expand their economic, cultural and political influence in the region, the newspaper reported.

Japan is also keen to show its staunchest allies, particularly the United States, its reasonable stance against China's aggressive territorial struggles with neighboring countries.

Still, both China and Japan are unlikely to yield their claims over the Senkaku Islands. Pundits are saying the dispute over Senkaku Islands may become a permanent fixture in the region's security landscape, while both countries bolster their economic ties.  

TagsSenkaku Islands, Senkaku Islands dispute, Japan-China relations, China-Japan Dispute