Japanese Prime Minister Shinzo Abe
While U.S. President Donald Trump appears to wage a trade "Cold War" on China, Japanese Prime Minister Shinzo Abe will promote a thaw with Beijing at a summit this month where business ties will be in the spotlight.
A tough line on China helped Abe to regain office in 2012 during a row over tiny East China Sea isles that put ties in a deep chill. Now, Abe hopes to build on a rapprochement welcomed by Beijing, which is locked in an escalating trade war with Washington.
Japan shares U.S. concerns about Beijing's maritime assertiveness and is extending its military reach to counter China. Japanese firms worry also about Chinese violations of intellectual property rights and technology theft.
Still, business ties with China, the world's second largest economy, are vital for Japan.
Trade tensions within the Group of 20 leading industrialised and emerging economies could only be solved by the countries directly involved, the chairman of a meeting of finance leaders from the G20 said after a gathering in Bali on Friday.Taking place on the sidelines of the International Monetary Fund and World Bank meetings on the Indonesian island, the G20 meeting provided little more than a forum for member countries to put their viewpoint on an escalating tariff war between the United States and China, the world's two biggest economies."We recognise we are now facing trade tensions among members of the G20," Argentine Treasury Minister Nicolas Dujovne, chairman of this year's G20 finance leaders' meeting, told a news briefing, without directly mentioning either the United States or China."The G20 can play a role in providing the platform for discussions. But the differences that still persist should be resolved by the members that are directly involved in the tensions."Winter is coming: Indonesia warns of new crisis from trade warThe United States and China have slapped tit-for-tat tariffs on hundreds of billions of dollars of each other's goods over the past few months, jolting financial markets and stoking fears the rising tide of protectionism could dent global growth.Dujovne said that while global growth projections remain steady, the expansion has become less even across economies as downside risks materialised."On trade tensions, we agree that international trade is an important engine of growth, and that we need to resolve tensions which can negatively affect market sentiment and increase financial volatility," he said.G20 chair says trade tensions must be solved by countries involvedDujovne sidestepped a question on how Japan ought to deal with trade frictions when it chairs the G20 meetings next year, saying only that "Japan will be the one deciding on the priorities."Japanese Finance Minister Taro Aso told reporters on Thursday that Tokyo hopes to discuss ways to fix global imbalances at next year's G20 gatherings.The G20 finance leaders did not produce a joint communique after their two-day meeting ended on Friday.
G20 fails to mend trade rift, chair urges protagonists to resolve disputes
"To ensure that Japan has sustainable economic growth, you cannot ignore economic relations with China," said a Japanese foreign ministry official, who spoke on condition of anonymity.
Abe has met Chinese President Xi Jinping many times since their first chilly conversation in 2014 on the sidelines of an Asia leaders' summit in Beijing.
Abe's Oct. 26 meeting with Xi, officially confirmed on Friday, will be the first full-scale Sino-Japanese summit since 2011. Both sides hope more mutual visits will follow.
The thaw has been linked to a shift in Beijing's diplomacy since late 2017 and increasing U.S.-China friction over trade.
Indonesian President Joko Widodo urged global central bankers and finance ministers on Friday to guard against growing risks facing the world's economy, as a heated a Sino-U.S. trade war roils both emerging and developed markets.At the plenary session of the International Monetary Fund and World Bank meetings being hosted by Indonesia, Widodo peppered his speech with references to the HBO series "Game of Thrones", where families and kingdoms battle for power in a fictional continent, to explain risks facing the global economy."All these troubles in the world economy, are enough to make us feel like saying: 'Winter is Coming'", he said, using a phrase that characters in the popular fantasy series often use to refer to the lurking threats that could destroy them.The meetings, attended by more than 19,000 delegates and other guests, including ministers, central bank heads and some leaders, come at a time of renewed tumult in global financial markets as investors dumped hundreds of billions of dollars worth of equities from Wall Street to European and Asian bourses.China trying to sway US vote, poses threat: officialsThe fear is that the China-U.S. trade row could upend global supply chains, and chill international trade and investment - a risk underscored by Widodo.Widodo said with growing rivalry in the world economy, "the situation could be more critical compared to the global financial crisis 10 years ago."He did not single out any one country but emerging markets, like Indonesia, have been battered by stormy conditions amid worries about the impact of an escalating Sino-U.S. trade war and monetary policy tightening in advanced economies.The market ructions have now cascaded through to developed markets with Wall Street extending a slide into a sixth session on Thursday amid the trade war fears.US says China spy charged with trying to steal aviation secretsThe United States and China have slapped tit-for-tat tariffs on hundreds of billions of dollars of each other's goods over the past few months.The tariffs stem from the Trump administration's demands that China make sweeping changes to its intellectual property practices, rein in high-technology industrial subsidies, open its markets to more foreign competition and take steps to cut a politically sensitive U.S. goods trade surplus. Potentially further inflaming tensions, China reported on Friday an unexpected acceleration in export growth in September and a record trade surplus with the United States. China's trade surplus with the United States was $34.13 billion in September, breezing past August's $31.05 billion."Lately it feels like the relations among the major economies are becoming more and more like "Game of Thrones"," said Widodo."Are we so busy fighting with each other and competing against each other that we fail to notice the things which are increasingly threatening, all of us alike, rich and poor, large and small."IMF chief says China faces balancing act as it seeks to maintain growthG20 MEMBERS NEED TO RESOLVE TRADE TENSIONSEarlier this week, the IMF cut its global economic growth forecasts for both 2018 and 2019 to 3.7 percent, from 3.9 percent in its July forecast, saying that the trade war was taking a toll and emerging markets were struggling with tighter liquidity and capital outflows.Separately on Thursday, the fund warned in its twice-yearly report on the Asia Pacific region that the market rout seen in emerging economies could worsen if the Federal Reserve and other major central banks tightened monetary policy more quickly than expected.Nicolas Dujovne, chairman of this year's G20 finance leaders' meeting, said that tensions remained among the group on trade that must be solved among countries directly involved."The G20 can play a role in providing the platform for discussions," Dujovne, who is Argentina's Treasury Minister, told a news conference after the group's meeting in Bali."But the differences that still persist should be resolved by the members that are directly involved in the tensions," he said.In his speech, Widodo called on finance ministers and central bank governors gathered in Bali to "cushion the blows from trade wars, technical disruption and market turmoil"."I hope, you will each do your part to nudge our various leaders, in the right direction," Widodo said, adding that "confrontation and collision impose a tragic price".At the plenary, IMF managing director Christine Lagarde estimated that the escalation of current trade tensions could reduce global GDP by almost one percent over the next two years."Clearly, we need to de-escalate these disputes," Lagarde said.
Winter is coming: Indonesia warns of new crisis from trade war
SHIFTING WINDS
Japanese firms want to see ties normalised so they can compete with U.S. and European rivals.
An executive at automaker Toyota, speaking on condition of anonymity, said the mood had changed from the "China risk" theme of the past few years. "The sentiment...is shifting very fast, leading to more for us to do in China," he said.
China is Japan's biggest trading partner. Japan is China's second largest trading partner, after the United States, and fourth biggest investor.
Japan's direct investment in China rose in 2017 for the first time in five years, a trend that continued in the first eight months of 2018, the Japan External Trade Organization said in a report that also flagged growing Japanese exports to China.
A highlight of Abe's visit is expected to be a forum attended by up to 1,000 executives and trade officials to discuss China-Japan economic cooperation in third countries.
China expects Abe to make a relatively supportive statement on its Belt and Road initiative, a vehicle to fund and build global transport and trade links in more than 60 countries.
"We really hope that Japan on this issue is not in vicious competition with China," said Wang Yiwei of Renmin University in Beijing. "It could be positive competition or even cooperation."
Belt and Road has come under fire for saddling poor nations with unsustainable debt through big projects that are not economically viable. Beijing rejects the criticism.
Japanese participation could help Belt and Road's image and allay the fears of debtor nations, experts and officials said.
Abe may, however, shun the Belt and Road label.
Japanese defence officials are wary of its military implications, and Tokyo is pushing its Free and Open Pacific Strategy to promote free trade and infrastructure across Asia, Africa and the Middle East.
Japan wants to ensure joint projects with China are transparent, open, economically viable and fiscally sound for debtor countries, officials said.
"This is not 'support' for Belt and Road. We will not ease global standards," a Japanese trade official said.
Several non-binding agreements, known as MOUs, are expected from the forum, including one on a project in Thailand, a Japanese source involved in the forum planning said.
Such agreements "would be a symbol of improving ties," said Koji Sako, a senior economist at Mizuho Research Institute.
"POISON PILL"
Japan is involved in efforts to forge a Regional Comprehensive Economic Partnership among 16 nations including China, as well as in talks on a China-Japan-South Korea free trade pact. Tokyo would thus balk at the sort of "poison pill" found in a new U.S.-Canada-Mexico free trade pact, Japanese officials said.
The provision effectively gives Washington veto power over any free trade deal with China. U.S. Commerce Secretary Wilbur Ross has said they might seek a similar clause with other countries.
Abe and Trump have agreed to start talks on a new Japan-U.S. trade deal that Washington hopes will cut its trade deficit, while Tokyo aims to avert higher tariffs on its auto exports.
"I can't imagine a situation in which we'd accept such a course," said another Japanese government source when asked about the poison pill provision.
The U.S. State Department and White House declined to comment when asked about the coming Abe-Xi summit.
A U.S. push to get Japan to join efforts to isolate China would present Tokyo with a dilemma, although officials said Abe could tell Trump that Japan was taking a different approach with the same goal - convincing China to play by global rules.
Such U.S. pressure could find support inside Japan.
Many conservative politicians are deeply wary of China, as are many Japanese voters. A survey published on Thursday showed 86 percent of Japanese had a "bad image" of China.
"There are some in Japan who think the security relationship with the United States takes precedence over Japan's economic issues," said Kiyoyuki Seguchi, research director at the Canon Institute for Global Studies.
"But if one...asks whether economic development is possible without cooperative development with China, the answer is 'No'."