Chinese, Japanese leaders unveil deals on bond sales

BEIJING — Chinese and Japanese leaders have unveiled initiatives to tighten financial links between East Asia’s economic giants and sometime rivals — measures that could expand use of China’s tightly controlled currency abroad.

BEIJING — Chinese and Japanese leaders have unveiled initiatives to tighten financial links between East Asia’s economic giants and sometime rivals — measures that could expand use of China’s tightly controlled currency abroad.

During a visit to Beijing by Japanese Prime Minister Yoshihiko Noda, the two governments said in a surprise announcement Sunday they will encourage use of their own currencies in bilateral trade, which now is conducted mostly in U.S. dollars.

They also agreed to support the sale of bonds denominated in China’s yuan by Japanese companies in Tokyo and foreign markets and by the state-owned Japan Bank of International Cooperation in mainland China’s markets, which are closed to most foreign investors.

The pledges were a striking step for China and Japan, which are the world’s second- and third-largest economies and are bound by billions of dollars in trade but whose political relations often are strained over conflicting territorial claims and other disputes.

“To support the growing economic and financial ties between China and Japan, the leaders of China and Japan have agreed to enhance mutual co-operation in financial markets of both countries and encourage financial transactions between the two countries,” the governments said in identically worded statements.

They said Japan’s government also planned to purchase Chinese government bonds, and an application process for official approval of that was under way.

The governments gave no timetable for practical steps to put the pledges into action or the size of possible bond offerings. Commercial banks still have to create yuan-denominated letters of credit and other tools before traders in Japan can use the currency.

The moves might reduce the dominance of the U.S. dollar in East Asia, the world’s fastest-growing region. The Kyodo News agency cited a Japanese official who told reporters some 60 per cent of trade between Japan and China is now settled in dollars, which requires companies to convert money between yen, dollars and yuan, adding to their costs.

Beijing controls the yuan’s exchange rate and the flow of money into and out of China’s booming economy. But the government has begun allowing limited use of yuan for trade. It said this month that some companies that obtain Chinese currency abroad will be allowed to invest it in mainland financial markets.

Most trade in yuan is conducted through Hong Kong, where Beijing also has created a market for yuan-denominated bonds that McDonald’s Corp. and some other foreign companies have used to raise money to invest in their mainland operations.

The easing of controls on bond sales could help to reduce costs for Japanese companies that need to raise money to invest in their China operations.

The communist government keeps China’s bond and other financial markets sealed off from global financial flows. That helped the country avoid the turmoil of the 2008 global financial crisis but has slowed the development of markets that Chinese leaders want to support economic development.

The latest pledges also might help to promote moves to allow the yuan to trade more freely on currency markets.

The United States and other trading partners complain that Beijing’s currency controls keep the yuan undervalued, giving China’s exporters an unfair price advantage and hurting foreign competitors at a time when the global economy is struggling.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

With a ban on sit-in dining set to begin at noon Friday, Las Palmeras owner Andre Lemus is gearing up for more takeout and delivery business. He has also applied to set up and outdoor patio, where dining is allowed under new restrictions, and is selling his own branded seasonings, salsa, guacamole, tequila bags, margerita kits, and even aprons like the one he is wearing.
Photo by PAUL COWLEY/Advocate staff
Big interest in outdoor patios in Red Deer as sit-down dining banned again

City of Red Deer has tweaked its patio regulations to make it easier to get a permit

Artist Delree Dumont has painted an Indigenous mural at St. Joseph High School. (Contributed photo)
Indigenous mural painted on Red Deer high school walls

A new Indigenous mural now sits on the walls of St. Joseph… Continue reading

Jessica Swainson learned about improvisation and filmmaking at The Hub on Ross before its closure. She’s pictured here with her former Hub instructor Jason Steele. (Contributed photo).
Red Deer city, arts council are working to close ‘gaps’ left by The Hub’s closure

Could some popular Hub programs be resurrected at Northside Community Centre?

Red Deer College (Contributed photo)
Updated: RDC students to be hit with steep fee and tuition increases

Many students will see more than $1,000 in extra education costs in 2021-22

A vial of the Medicago vaccine sits on a surface. CARe Clinic, located in Red Deer, has been selected to participate in the third phase of vaccine study. (Photo courtesy www.medicago.com)
Red Deer clinical research centre participating in plant-based COVID-19 vaccine trial

A Red Deer research centre has been selected to participate in the… Continue reading

The Rogers logo is photographed in Toronto on Monday, September 30, 2019.  THE CANADIAN PRESS/Tijana Martin
Experts warn of economic implications from Rogers wireless outage

A massive wireless outage that has left customers of Rogers Communications Inc.… Continue reading

Finance Minister Chrystia Freeland delivers the federal budget in the House of Commons as Prime Minister Justin Trudeau looks on in Ottawa on Monday April 19, 2021. The federal government unveiled spending plans to manage the remainder of the COVID-19 crisis and chart an economic course for a post-pandemic Canada. THE CANADIAN PRESS/Sean Kilpatrick
Federal Budget 2021: Liberals bank on child care, business aid to prod growth

OTTAWA — The federal Liberals are betting that billions more in debt… Continue reading

University of Victoria rowing coach Barney Williams is photographed in the stands during the Greater Victoria Invitational at CARSA Performance Gym at the University of Victoria in Victoria, B.C., on Friday, November 29, 2019. The University of Victoria says Williams has resigned effective immediately. THE CANADIAN PRESS/Chad Hipolito
University of Victoria women’s rowing coach resigns by mutual agreement

VICTORIA — The University of Victoria says the head coach of its… Continue reading

Alberta NDP Leader Rachel Notley announces proposed new legislation to protect Alberta’s mountains and watershed from coal mining at a news conference in Calgary on Monday, March 15, 2021. A group of 35 scientists from the University of Alberta are urging the provincial government to rethink its plans for expanding coal-mining in the Rocky Mountains. THE CANADIAN PRESS/Jeff McIntosh
Alberta scientists urge adoption of bill that would protect against coal mining

EDMONTON — Some 35 scientists from the University of Alberta are urging… Continue reading

A driver shows identification to an Ottawa police officer as a checkpoint as vehicles enter the province from Quebec Monday April 19, 2021 in Ottawa. THE CANADIAN PRESS/Adrian Wyld
Quebec and Ontario impose travel restrictions to slow surging virus variants

Ontario and Quebec imposed new interprovincial travel restrictions on Monday amid growing… Continue reading

Education Minister Adriana LaGrange was in Red Deer on Friday to provide an update on the province's COVID-19 response in schools.
Photo by PAUL COWLEY/Advocate staff
LaGrange: Feedback needed to refine curriculum

As the Minister of Education my role has been guided by a… Continue reading

In this Feb. 24, 2020, photo, the Olympics rings are reflected on the window of a hotel restaurant as a server with a mask sets up a table, in the Odaiba section of Tokyo. The vaccine rollout in Japan has been very slow with less than 1% vaccinated. This of course is spilling over to concerns about the postponed Tokyo Olympics that open in just over three months.(AP Photo/Jae C. Hong, File)
Will Japanese Olympians be vaccinated ahead of the public?

TOKYO — The vaccine rollout in Japan has been very slow with… Continue reading

PSG's Kylian Mbappe, right, greets Bayern's Lucas Hernandez at the end of the Champions League, second leg, quarterfinal soccer match between Paris Saint Germain and Bayern Munich at the Parc des Princes stadium, in Paris, France, Tuesday, April 13, 2021. (AP Photo/Francois Mori)
PSG, Bayern the big names missing from Super League plan

DÜSSELDORF, Germany — The plan for the new Super League soccer competition… Continue reading

Most Read