The leaders of China and Japan pledged a new chapter of friendship and cooperation as they lauded progress in resolving their differences. However, as Daniel Schearf reports from Beijing, some tension did surface over Tibet and the Beijing Olympics.

China's President Hu Jintao met with Japanese Prime Minister Yasuo Fukuda Wednesday on the second day of his five-day trip to Japan.

The two Asian leaders signed a joint document pledging to look past historical conflict to cooperate for friendship and peace.

They were optimistic about chances for an early resolution to a dispute over territory in the East China Sea. The two sides also agreed to hold annual meetings and cooperate on issues ranging from climate change, to trade, to educational exchanges.

In a show of warming relations, Mr. Hu said he would lend Japan two pandas after the death of Japan's only captive panda. The two leaders were also expected to play ping-pong.

However, the meeting was not all friendly exchanges.

During a joint press conference Mr. Fukuda said he was glad to see China engaging with the Dalai Lama after recent Tibetan unrest. But, Mr. Hu had sharp words for the Tibetan spiritual leader.

He says their contact and dialogue with the Dalai Lama's private envoys was serious and solemn. He says they hope the Dalai Lama's side shows sincerity with their actual actions and create conditions to hold the next round of dialogue by immediately stopping their separatist movement, suppressing agitation of violence, and halting destruction of the Olympics. He says they would then hope such contact would deliver concrete results.

During Mr. Hu's visit, hundreds of protesters demonstrated on the streets of Tokyo, many of them calling for freedom for Tibet.

Japan joined in the chorus of international voices expressing concern about China's recent crackdown in Tibetan areas after anti-government protests in March turned violent. China cut off Tibetan areas and forced monks to stay in their monasteries.

Human rights protesters targeted the global Olympic torch relay and called for a boycott of the Beijing Olympics. China reacted by encouraging nationalism and counter -protests and accused western media of bias in reports on the situation.

Several western leaders have decided not to attend the opening ceremony of the games.

Mr. Fukuda would not say whether he would attend, but he did have a warning for China.

He says he wants the Olympics to be successful and that they need to be successful because the world is watching. He says the Japanese want the Chinese government and people to realize this, and that people from all over the world will be able to watch the games with pleasure.

The visit by Mr. Hu was the first by a Chinese President since 1998 when then President Jiang Zemin lectured Japanese lawmakers after failing to get an adequate apology for Japan's war-time atrocities.

Relations improved in 2006 after Japanese prime ministers stopped visiting a shrine that honors war criminals killed in World War Two.

Last year China overtook the United States to become Japan's largest trading partner.