By Mure Dickie in Beijing and Michiyo Nakamoto in Tokyo Published: June 19 2008 03:00 | Last updated: June 19 2008 03:00 Beijing and Tokyo are to work together to exploit gas reserves in disputed waters of the East China Sea, under a long-awaited deal demonstrating the determination of east Asia's biggest powers to bridge their differences. An agreement announced by the two governments yesterday opens the way for Japanese investment in a Chinese gas project that has stirred diplomatic friction. It also sets aside an area for joint exploration and eventual development. "This means we are going to make [the East China Sea] a sea of peace and friendship," said Yasuo Fukuda, Japanese prime minister. China and Japan dispute the extent of their exclusive economic zones in the marine area, raising potentially dangerous disputes over ownership of gas reserves there. Tokyo says its zone extends to a median line between the two countries' territories, while Beijing says its zone stretches much closer to Japan. A particularly bitter dispute has centred on Beijing's exploitation of the Chunxiao field, which lies within China's zone, but just a few kilometres from the median line, and which Tokyo has said could draw gas from its side. Under yesterday's deal, the Chinese state-owned energy companies operating in Chunxiao will "welcome the participation" of Japanese investors in the field. Such joint investment will allow Beijing to avoid any acceptance of Tokyo's median-line claim, while salving opposition in Japan to development of the field. Indeed, yesterday's deal is structured to avoid directly addressing the underlying demarcation dispute, allowing the two sides to undertake co-operation "without prejudicing their respective legal positions". The deal sets aside a large block of territory for joint exploration, intended to lead - through "mutual agreement" - to joint development under the "principle of mutual benefit", the two sides said. While estimates of how much gas is available in the East China Sea vary widely, the dependence of both China and Japan on imported energy have added to the sensitivity of resource claims. However, both sides have made the easing of tensions on the issue a political priority since their leaders ended years of diplomatic feuding in late 2006. "China and Japan, through consultations on an equal footing, reached principled consensus on the East China Sea issue," said Jiang Yu, a Chinese foreign ministry spokeswoman. Masahiko Komura, Japan's foreign minister, said: "This is a good example of how Japan and China can solve any difficult problem through negotiation." Hard work will still be required to settle crucial details of co-operation, including potentially thorny issues of how to divide resources, and which markets should have priority. Co-operation would also be vulnerable to any new friction between the Asian neighbours. In China, where anger against Japan still runs deep among a population that nurses bitter memories of Tokyo's brutal 1931-45 occupation, there have already been signs of opposition to the deal. In a demonstration outside Japan's embassy in Beijing yesterday, a handful of protesters denounced any compromise over gas fields or exclusive economic zone demarcation lines. "Resolutely oppose any signing of an East China Sea agreement with Japan," read one of the banners carried by the protesters, who were given tacit approval for their demonstration by the police.