Japanese Finance Minister Taro Aso will meet with his Chinese counterpart, Liu Kun, in Beijing today to discuss financial cooperation. In particular, the two men are likely to focus on a long-delayed currency swap deal, which would allow provide the Chinese currency to Japanese banks operating in China and the yen to Chinese companies doing business in Japan.
The visit is a bid to reset the turbulent relations of recent years. The last currency swap deal was allowed to lapse in 2013 amid territorial disputes and World War II commemoration spats.
Such an exchange between the central banks of both countries would aid in cross-border investments during financially turbulent times by providing a safety net.
The deal currently under negotiation will be worth $30 trillion to each nation—a significant upgrade on the last lapsed swap agreement of $3 trillion. It reflects both Tokyo and Beijing’s unease at the current protectionist policies emanating from Washington. Japanese automakers still face the prospect of US tariffs of 25% and China’s trade war with the US continues. However, a new Tokyo-Beijing economic axis against the US appears unlikely given China and Japan’s significant strategic, historical and political differences.
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John is a Senior Analyst with an interest in Indo-Pacific geopolitics. Master of International Relations (Australian National University) graduate with study focus on the Indo-Pacific. Qualified lawyer (University of Auckland, NZ) with experience in post-colonial Pacific & NZ legal systems.