A century ago on Friday German troops raised the white flag over a fortress on the Chinese coast, surrendering to Japan as Tokyo expanded its presence, fuelling animosity that hampers relations with Beijing to this day.

Chinese President Xi Jinping and Japanese Prime Minister Shinzo Abe have yet to hold a formal summit and despite Abe's desire for one next week at the Asia-Pacific Economic Cooperation forum in Beijing, the prospects are murky against a backdrop of territorial disputes and historical resentment.

The Siege of Tsingtao was the sole battle of World War I fought in East Asia, and total deaths were in the hundreds, far from the carnage Europe would see during its four-year slaughter.

But the battle's implications were far-reaching, highlighting China's impotence in the face of machinations by foreign powers on its own soil as German control was ceded to Japan, and contributing to an ongoing awakening in Chinese national consciousness.

"This is a small, relatively forgotten battle but it's emblematic both of the way that foreign powers fought one another, handed out territory between themselves and so on in China with no reference to the Chinese at all," British author Jonathan Fenby, who published a history of the siege, said at a talk in Beijing.

It was a milestone in the relationship between China and Japan he said, adding: "One underestimates the hostility there at one's peril."

Contemporary relations between the Asian giants remain haunted by history, particularly the legacy of Japan's World War II aggression and a still simmering dispute over uninhabited islands in the East China Sea controlled by Japan but also claimed by China.

Contacts between the two sides have increased in recent weeks and a handshake between Abe and Chinese Premier Li Keqiang at an October meeting of European and Asian leaders in Milan added to speculation a significant meeting with Xi at APEC was possible.

But Chinese foreign ministry spokesman Hong Lei declined to be drawn on the prospect Thursday, offering only Beijing's stock response that Japan should "show sincerity" and "take concrete measures" to improve relations.

- 'National Humiliation' -

Many ordinary Chinese citizens remain deeply suspicious of their neighbour across the water.

"The Japanese just want to pick a fight, like Abe," said an unemployed man visiting a park that used to house German military facilities in Qingdao -- the modern transliteration of the city's name.

When World War I broke out in the summer of 1914, China was in political turmoil after the fall of the Qing Dynasty just three years earlier. Foreign countries controlled key ports and enjoyed extraterritorial rights for their citizens.

One of them was Germany. A relative latecomer to colonial adventures, Germany in 1897 seized the Yellow Sea port of Qingdao, which became its key naval base in Asia and the Pacific, where it also had possessions in far-flung New Guinea, Samoa and the Marshall Islands, among others.

German-style architecture can still be seen in Qingdao, a hilly, verdant city known throughout China for another German cultural legacy -- its namesake Tsingtao beer.

Japan, for its part, was a fast modernising power coming off military victories over the Qing and Imperial Russia. And when World War I broke out it supported its ally Britain, some of whose troops also took part in the siege.

Hostilities commenced in late August with a blockade, while the full-scale siege began on October 31. When it was over eight days later Japanese authority replaced Germany's in Qingdao in a transfer later formally endorsed by the Treaty of Versailles.

Noriyuki Nakama, a Japanese businessman visiting Qingdao, said that his nation's actions should be seen in the context of geopolitics a century ago, when he said Japan's own fears of Western colonialism drove it to strengthen itself and embrace expansion as a result.

"Considering the current of the times, well, I think it couldn't really be helped," he said.

But for the Chinese, Qingdao's fall from one foreign hand to another is part of a long string of historical ignominy that began with the 19th-century Opium Wars.

"Never Forget National Humiliation", reads an inscription at the park in Qingdao, one small example of how the Communist Party stokes patriotism and its own claim to legitimacy by stressing a narrative of national victimisation, with Japan a conspicuous target for criticism.

"Every single Chinese in our country knows that China-Japan relations aren't good," said Zhu Yuhua, a cultural heritage specialist visiting a museum dedicated to the siege, who cited earlier and later wars between them in 1894-95 and 1937-45.

"This isn't in doubt, it's common understanding."