There are several reasons to believe that long-time rivals China and Japan have entered a period of

renormalization of relations, Former Australian Prime Minister Kevin Rudd told CNNs Christiane Amanpour on
Tuesday.

Chinese President Xi Jinping and Japanese Prime Minister Shinzo Abe broke the ice with a somewhat anxious
handshake Monday at the APEC summit in Beijing.

I think it's six months of diplomacy, which lie behind that handshake, Kevin told Amanpour, and that the meeting
between the two, however difficult that was, was the formalization of the beginnings of a renormalization.

Rudd, now incoming President of the Asia Society Policy Institute, went on to explain why he believes the JapanChina relationship is now in a better place.

He started by addressing the tensions over disputed islands in the East China Sea, which remain a major sticking
point between the two countries.

Those who are studying this closely will tell you the number of military and naval assets deployed by both sides
to this disputed area is now being decreased in the last several months rather than being increased.

Secondly, there are early discussions under way in terms of a hotline between the two militaries about how you
can manage an incident, if it were to occur, through the accidental collision of aircraft or ships at sea rather than
just have uncontrolled incident escalation.

And I think the other thing to bear in mind is that both sides have worked out with a weak Japanese economy
right now and slowing growth in China, it makes sense, common sense, for them to open the economic doors to
each other more comprehensively.

So Rudd believes we have reached a point where both sides recognize that it was not in either of their interests
to risk, A, the possibility of conflict, and B, they had more to gain in fact by removing political obstacles which
currently exist to the further expansion of the Japan-China economic relationship.

Xi Jinping is also meeting with President Barack Obama at the APEC summit. Rudd believes Beijings realization
that the U.S. economy was picking up steam has had an impact.

The Chinese, a year or so ago, may have been reaching conclusions that the U.S. was never going to exit the
vortex which it descended into after the global financial crisis. Well, that level of Chinese skepticism, I think, has
disappeared in the last six months or so.

So I believe that as this meeting occurs, there will be a sense of some mutual respect about the respective state
of their economy and remember momentarily the U.S. remains the vastly dominant economic power in the region
still, despite the Chinese military modernization program.

However, and as President Obama is still pushing for progress on a Pacific Rim trade deal that doesnt include
China, Rudd stressed that the worlds two largest economies must develop some constructive realism if they
want to collaborate.

What I argue is pretty simple. One: a framework which acknowledges in realistic terms, the fact that there are
certain, at this stage, irreconcilable bottom lines. They [the U.S. and China] are countries with different political
value systems. They are countries with different geopolitical interests in parts of Asia.

But secondly, it's not an exclusively realist relationship which is destined towards conflict. There are constructive
elements of the relationship where there's sufficient commonality, sufficient commonality of interests and values
for the two countries to really do good things together bilaterally, regionally, and globally.

Rudd told Amanpour that Xi Jinping, whom he met in various capacities over the years in a number of
conversations and who was named China's President in March 2013, probably has the most complex job that
any head of government has anywhere in the world today.

He is first and foremost a person who is deeply committed to the future role of the Communist Party in China.

That's why he's launched this massive anti-corruption campaign, in order to restore the party's credibility in the
eyes of the Chinese people.

I think the other thing to know about President Xi Jinping is that he has a profound nationalist vision, which is all
about - to use the Chinese word - China's restoration of its - of its former national greatness the return of China
to the way in which it was in earlier periods in history.

And theyre right now in a profound reengineering of the structure of the Chinese economy, and for him that is
the long-term basis of Chinese power, a properly functioning economy.