Dec. 8 (Bloomberg) -- Improving ties between China and Japan may allow their leaders to focus on trade accords instead of bickering over history when they meet next week in Cebu, the Philippines.

China's Premier Wen Jiabao and Japan's Prime Minister Shinzo Abe will discuss political and economic issues during the Dec. 8-10 meeting of the 10-member Association of Southeast Asian Nations plus China, Japan, and South Korea. China is Japan's second-biggest trading partner, and trade between the two hit a record high of $189 billion last year.

The heads of Asia's two largest economies will focus more on ``trade than politics because China and Japan have begun to sort out their differences over history,'' Guan Anping, managing partner of Beijing-based Anping & Partners and a former Chinese trade official, said in a Dec. 5 phone interview.

Ties between the two countries soured over former Japanese Prime Minister Junichiro Koizumi's visits to Tokyo's Yasukuni Shrine, where 14 Japanese leaders convicted of war crimes are memorialized, complicating economic relations and efforts to persuade North Korea to shut down its nuclear weapons program.

China-Japan relations turned ``back on track'' after Abe succeeded Koizumi in September, Councilor Huang Xingyuan, of China's Foreign Ministry, said following a meeting between Abe and Chinese President Hu Jintao in Hanoi on Nov. 18.

`Eliminate Harm'

Abe apologized to Hu for Japan's aggression in the first half of last century on a visit to Beijing on Oct. 8, the day before North Korea tested a nuclear weapon. It was the first visit to China by a Japanese prime minister in five years.

``Mr. Abe was able to eliminate potential harm that diplomacy might have on economic relations,'' said Eisuke Sakakibara, professor at Waseda University in Tokyo and a former currency policy chief at Japan's Ministry of Finance. ``That makes it easier for joint cooperation.''

Southeast Asian leaders will discuss energy security at the summit because of the increasing importance of maintaining supplies of oil and gas for the region, Chinese and Japanese officials have said. Abe and Wen are scheduled to meet together in Cebu on Dec. 11. They may later meet South Korean President Roh Moo Hyun.

Japan has argued for the inclusion of India, Australia and New Zealand in a proposed Asia Economic Community, against the wishes of China. Those countries' leaders also are attending this year's summit. China favors retaining the Asean plus three group.

``Japan and China used to argue for the sake of arguing,'' former Chinese trade official Guan said. ``Tensions will continue to exist, but there will be less jockeying for influence between China and Japan at the Asean summit this year. The focus will be on coordinating economic and diplomatic policy in East Asia.''

Charm Offensive

To offset Japan's influence, China has been courting leaders of Asean, which comprises Singapore, Malaysia, Thailand, Indonesia, Philippines, Vietnam, Laos, Cambodia, Myanmar and Brunei.

China feted Asian leaders in the southern Chinese city of Nanning at the end of October to ``celebrate 15 years of formal relations'' between Asia's second-largest economy and Asean, a group founded in 1967 partly as a U.S.-backed bulwark against communism. Southeast Asian countries only recognized China when it stopped backing communist insurgencies against their governments.

Relations between China and Asean have improved in the past 10 years. At the Nanning China-Asean summit, leaders vowed to boost trade by reiterating an aim to cut tariffs and set up a free-trade area with an estimated 1.8 billion people.

Asean's trade with China rose 23 percent last year to $130 billion and may exceed $200 billion by 2010, China's Premier Wen said on Oct. 31.

``Japan may be less uneasy with China's growing ties with Asean, especially as its relationship with China improves,'' said Hu Biliang, a senior economist with the Chinese Academy of Social Sciences, in a phone interview on Dec. 5. ``Japan and China will definitely cooperate more and cooperation is critical to the success in the rise of Asia Economic Community.''

To contact the reporter on this story: Allen T. Cheng in Beijing at acheng13@bloomberg.net;

Last Updated: December 7, 2006 23:50 EST