Japan, China to Discuss Currency Swap Pact

August 29, 2018

Tokyo- Japan and China are expected to discuss reinstating their currency swap pact at their financial dialogue to be held in Beijing on Friday, informed sources said Tuesday.

The two countries will also exchange opinions on the intensifying trade row between the United States and China, the sources said.

The Japan-China financial dialogue will be the first since May 2017. The upcoming talks will be attended by Japanese Finance Minister Taro Aso and his Chinese counterpart, Liu Kun, among other participants.

The meeting is apparently intended to lay the groundwork as well for a summit between Japanese Prime Minister Shinzo Abe and Chinese President Xi Jinping that may take place in October.

In their talks held in Tokyo in May, Abe and Chinese Premier Li Keqiang agreed to bring back the two countries' currency swap pact at an early date.

Since then, working-level officials of the two nations have been talking about the matter. The two sides hope that a formal decision to reinstate the pact will be made at the expected Abe-Xi summit.

The pact would allow the yen to be swapped for the yuan and vice versa in times of a financial crisis to keep the financial system stable.

For the fist time, senior officials of the two countries' financial industry regulators will take part in the upcoming financial dialogue.

At a press conference on Tuesday, Aso said he hopes that the financial dialogue will help Abe produce results during his expected visit to China.

The administration of U.S. President Donald Trump has imposed additional tariffs on 50 billion dollars' worth of imports from China, in an action against intellectual property violations by the Asian giant. The U.S. measure prompted Beijing to take a similar retaliatory move.

Japan supports the United States in terms of the issue of China's intellectual property violations.

Meanwhile, Tokyo opposes the Trump administration's planned add-on automotive tariffs, sharing the position with Beijing.

In light of the U.S.-China trade friction, Japan is therefore likely to be in a difficult position at the financial dialogue, pundits said.

The Japan-China financial dialogue was launched in March 2006, and six rounds of such talks have been held. Jiji Press