Chinese Vice Premier Wu Yi (R) shakes hands with Hiroshi Okuda, Chairman of the Federation of Economic Organizations (Keidanren), before a luncheon in Tokyo today. (Reuters)

Chinese Vice Premier Wu Yi has cancelled a meeting with Japanese Prime Minister Junichiro Koizumi that had been billed as a way for the two nations to help resolve tensions between them.

"As per the guidance of the Chinese government, she has to return this afternoon due to urgent domestic duties," said Chief Cabinet Secretary Hiroyuki Hosoda, the Japanese government spokesman.

Officials would not elaborate on the reasons for the cancellation of the meeting, which was set for Monday afternoon.

But Tokyo Television, quoting government sources, said Wu wanted to avoid discussions of Koizumi's visits to the Yasukuni shrine, a sanctuary to war dead in Tokyo.

Chinese President Hu Jintao had met Sunday in Beijing with senior lawmakers of Koizumi's Liberal Democratic Party and warned them that visits to the Yasukuni shrine were endangering ties.

The shrine is dedicated to 2.5 million Japanese who died in the country's wars, including 14 top war criminals from World War II.

Koizumi has visited the shrine every year since taking office in 2001, with the last visit on January 1, 2004. His visits have angered China and South Korea, which suffered bloody occupations by Japan last century.

Last week, however, Koizumi indicated he would pay another visit to the shrine.

Wu also cancelled a meeting with Katsuya Okada, leader of the main opposition Democratic Party of Japan.

But a foreign ministry official said she would keep a scheduled lunch with Hiroshi Okuda, who heads the largest business lobby, Nippon Kendanren, and is chairman of Toyota Motor, Japan's biggest company.

China last year became Japan's biggest trading partner, with Japanese firms drawn to China's vast pool of cheap labor and growing middle-class market.

Chinese foreign ministry spokesman Kong Quan had said last Tuesday that Wu, a veteran negotiator and Politburo member, would meet Koizumi during her visit.

China's official Xinhua news agency, announcing her departure, said she was "expected to exchange views with the Japanese leaders on issues of common concern during the visit".

Wu arrived in Japan last week to attend the World Exposition in the central province of Aichi.

She also met with business leaders in Aichi's main city of Nagoya and called for talks to reach a bilateral free-trade agreement, an idea the Koizumi government reacted cautiously to.