Japan and China will hold their first bilateral financial dialogue in two years on Saturday to discuss risks to Asia’s economic outlook, such as the protectionist policies advocated by U.S. President Donald Trump and tension over North Korea, officials said. Chinese Finance Minister Xiao Jie, who missed a trilateral meeting with his Japanese and South Korean counterparts on Friday for an emergency domestic meeting, has flown in for the bilateral dialogue, seeking to dispel speculation his absence had diplomatic implications. Xiao and Japanese Finance Minister Taro Aso will discuss issues ranging from North Korea’s nuclear and missile programme to the two countries’ economic outlook and financial cooperation during the dialogue, to be held on the sidelines of the Asian Development Bank’s annual meeting in Yokohama, eastern Japan.
Senior finance officials from both countries will also hold a separate round of talks, Japanese Finance Ministry officials say. Relations between Japan and China have been strained over territorial rows and Japan’s occupation of parts of China in World War Two, though leaders have recently sought to mend ties through dialogue. Still, China’s increasing presence in infrastructure finance has alarmed some Japanese policymakers, who worry that Beijing’s new development bank, the Asian Infrastructure Investment Bank (AIIB), may overshadow the Japan-backed ADB. Japan and China do agree on the need to respect free trade, which is crucial to Asia’s trade-dependent economies. Finance officials from Japan, China and South Korea agreed to resist all forms of protectionism in Friday’s trilateral meeting, taking a stronger stand than G20 major economies against the protectionist policies advocated by Trump.
China has positioned itself as a supporter of free trade in the wake of Trump’s calls to put America’s interests first and pull out of multilateral trade agreements. Japan has taken a more accommodative stance toward Washington’s argument that trade must not just be free but fair.