‘China, Japan sign $30 billion currency swap pact

255
Chinese Premier Li Keqiang and Japanese Prime Minister Shinzo Abe attend a welcome ceremony outside the Great Hall of the People in Beijing, China October 26, 2018. (Reuters)

Multiple agreements signed during Japanese Prime Minister Shinzo Abe’s visit to Beijing for the first formal Sino-Japanese summit in seven years, as Asia’s two biggest economies look to cement ties amid trade friction with US.

China and Japan on Friday pledged to forge closer ties as both countries stood together at an “historic turning point”, signing a broad range of agreements including a $30 billion currency swap pact, amid rising trade tensions with Washington.

The arrangement, which takes effect on Friday and lasts until October 25, 2021, will allow the exchange of local currencies between the two central banks for up to 200 billion yuan or 3.4 trillion yen ($30 billion), the Bank of Japan said.

The pacts were reached on Japanese Prime Minister Shinzo Abe’s three-day visit to Beijing as the two neighbours looked to carve out new areas of cooperation and seek new ways to promote trust, which has been fragile at times since diplomatic relations resumed in 1972.

Japanese firms including big auto companies like Toyota hope to see normalised ties with China so they can compete with US and European rivals, while Beijing expects Tokyo’s endorsement of its ambitious Belt and Road programme, an initiative that Chinese President Xi Jinping hopes will further boost trade and transport links with other countries.

‘Historic turning point’

Abe said on Friday that bilateral relations with China are at an “historic turning point” and that he expects new possibilities in industries such as infrastructure, logistics, healthcare and finance.

He has held “frank” discussions with Chinese Premier Li Keqiang since arriving in Beijing on Thursday and is expected to meet with Xi later on Friday in the first full-scale Sino-Japanese summit since 2011.

Efforts in advancing China-Japan ties should “persevere unremittingly to prevent the appearance of new twists and turns” so that previous efforts did not go to waste, said Li at a joint briefing with Abe on Friday.

Chinese Premier Li Keqiang and Japanese Prime Minister Shinzo Abe attend a welcome ceremony outside the Great Hall of the People in Beijing, China October 26, 2018.
Chinese Premier Li Keqiang and Japanese Prime Minister Shinzo Abe attend a welcome ceremony outside the Great Hall of the People in Beijing, China October 26, 2018. (Reuters)

“The Chinese side is willing to work with the Japanese side to return to a normal track, and maintain the stable, sustained and healthy development of bilateral relations,” he said, adding that he had held candid discussions with Abe since his arrival on matters of mutual concerns.

They reached consensus, Li said, that safeguarding long-term healthy and stable China-Japan ties was in accordance with the interests of both countries and the region and the world.

Bilateral ties enter ‘new phase’

“From competition to co-existence, Japan and China bilateral relations have entered a new phase. Hand in hand with Premier Li, I would like to advance our ties forward,” Abe said at the briefing.

Ahead of the briefing, China and Japan signed an agreement to prepare yearly plans for talks, dialogues and exchanges, as well as a pact to step up cooperation in innovation.

They also agreed to boost cooperation in the securities markets including the listing of exchange-trade funds (ETFs), and facilitate smoother customs clearance.

Both sides signed a currency swap agreement of up to $30.29 billion (3.4 trillion yen), effective until 2021. They also inked a deal towards establishing a yuan clearing bank.

Li said both sides had agreed that as major countries, China and Japan should uphold free trade and accelerate talks on the Regional Comprehensive Economic Partnership (RCEP) and on a China-Japan-Korea trade zone.

RCEP is a free trade agreement proposed by China with Southeast Asia and various countries on the Pacific Rim including Japan.

The move to boost economic ties came as China and the United States slap tit-for-tat tariffs on each other in recent months.

Japan is at risk as it exports to China manufacturing equipment and electronic parts, which are used to make finished goods for the United States and other markets.

Source: TRTWorld and agencies
SHARE