China to hold trade talks with Japan, South Korea

PHNOM PENH Mon Nov 19, 2012 6:58am EST

PHNOM PENH (Reuters) - China will hold ministerial talks on a free trade area (FTA) with Japan and South Korea at an East Asia Summit in Cambodia, a Chinese government spokesman said on Monday, in a step towards engagement with Japan after recent diplomatic tension.

The three East Asian countries, which account for about a fifth of the global economy, agreed to launch negotiations on a trade pact in May but the pledge has been overshadowed by a spike in tension between Japan and China over disputed islands.

The Chinese and Japanese leaders were not scheduled to hold direct talks at the summit, China's Foreign Ministry said, but three-way ministerial talks on the FTA would go ahead on Tuesday.

"The FTA between China, Japan and Korea is an important vehicle towards broader integration of trade and economy in this region," the Chinese spokesman told reporters.

Sino-Japanese relations deteriorated sharply after the Japanese government bought the disputed islands, called Senkaku in Japan and Diaoyu in China, from a private Japanese owner in September, triggering violent protests and calls for boycotts of Japanese products across China.

A Japanese official confirmed that talks were scheduled on Tuesday afternoon involving China's commerce minister, Chen Deming, and Japanese Trade Minister Yukio Edano.

Pursuing free trade agreements, including a U.S.-led Trans-Pacific Partnership (TPP) is one of the main policy goals for Japanese Prime Minister Yoshihiko Noda, whose Democratic Party is lagging behind main opposition Liberal Democratic Party in opinion polls ahead of a December election.

Earlier, Chinese Premier Wen Jiabao met South Korean President Lee Myung-bak on the sidelines of the East Asia summit in Phnom Penh and agreed to press ahead with free-trade talks.

"The two sides should accelerate bilateral FTA negotiations to reach consensus at an early date and make joint efforts to provide a fair, open and transparent environment for enterprises," Wen was quoted as saying by China's Xinhua news agency.

He said trade between the two countries would likely meet a target of $300 billion dollars by 2015, up from $220.6 billion last year.

(Editing by Stuart Grudgings and Robert Birsel)