Japan may press China on slowdown, shadow banking at G20

TOKYO Thu Jul 11, 2013 9:11am EDT

A businessman looks at his mobile phone as he walks in the financial area of Pudong in Shanghai May 30, 2013. REUTERS/Carlos Barria

A businessman looks at his mobile phone as he walks in the financial area of Pudong in Shanghai May 30, 2013.

Credit: Reuters/Carlos Barria

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TOKYO (Reuters) - Japan may press China at a global meeting next week for more information about a slowdown in the world's No. 2 economy and risks posed by its "shadow" banking system, Tokyo's top financial diplomat said on Thursday.

Global financial markets have been gripped by concern over faltering growth and financial stability in China, in addition to worries over capital outflows from emerging markets, as investors anticipate the U.S. Federal Reserve will wind down its monetary stimulus.

Both issues are likely to be discussed when finance chiefs from the Group of 20 big industrial and developing economies gather in Moscow on July 19 and 20, Mitsuhiro Furusawa, vice finance minister for international affairs, told Reuters.

"The situation in China is not necessarily clear, and it would be desirable to clarify various data and issues," Furusawa told Reuters in an interview.

"Everyone is not necessarily sharing information on regional shadow banking, and we are paying close attention to see what the real picture is in China," said Furusawa, who acts as Finance Minister Taro Aso's "sherpa" at global financial gatherings.

Grim Chinese exports data this week have some economists wondering if the economy can hit Beijing's 7.5-percent growth target.

Another concern is shadow banking, China's network of thousands of unofficial credit providers, pawn shops, trust firms and various other non-bank loan vehicles.

Credit rating agency Fitch says some 36 percent of outstanding credit in China, nearly $6 trillion, lies outside banks' loan portfolios, a huge pool of money which market participants find difficult to track and which could cause an ugly credit mess in a steeper slowdown.

The IMF said on Tuesday China's slowdown was a particularly big risk as Beijing seeks to navigate a shift away from export and investment dependence and toward consumption-led growth.

DOING THE RIGHT THING

Furusawa played down concerns aired by the International Monetary Fund over risks posed by Japan's enormous debt, which, at well over twice annual economic output, is the largest in the industrial world.

And he said Japan would assure other G20 members uneasy over the yen's depreciation that the aggressive reflationary policies of Prime Minister Shinzo Abe do not involve targeting currencies and will have positive spillover effects for the global economy.

When G20 finance ministers and central bankers met in February, the talk was of "currency wars," an attempt by emerging economies to counter the sharp weakening of the yen resulting from Abe's reflationary policy.

The focus of debate has shifted towards the reversal of capital flows out of emerging economies on expectations that the U.S. Federal Reserve will start winding down its stimulus measures later this year, Furusawa noted.

The Fed's discussion of tapering off its quantitative easing has "triggered a market reaction, sending currencies down and inflation up in emerging economies," Furusawa said.

The IMF also cited Abenomics as a global risk for the first time, saying its focus on short-term growth through massive monetary easing and a big burst of government spending might not be followed by structural and fiscal reform.

But Furusawa said it was wrong to see this as a fresh concern. Rather, he said, IMF chief economist Olivier Blanchard was merely restating the fund's long-held position that Japan's long-term interest rates could surge if Tokyo doesn't put its fiscal house in order over the medium term.

Japan plans to do just that, he said, and the delegation led by Finance Minister Aso and Bank of Japan Governor Haruhiko Kuroda will explain the government's fiscal consolidation policies to their G20 counterparts in Moscow.

The G20 has agreed that advanced economies would develop medium-term fiscal strategies by the G20 leaders' summit in St. Petersburg in September. Furusawa said each country is expected to come up with its own plan, rather than "common" targets.

(Reporting by Tetsushi Kajimoto; Editing by William Mallard and Simon Cameron-Moore)

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Comments (4)
MikeBarnett wrote:
The US continues its pretended panic about China’s slower GDP growth that remains above 7.5%, about 4 times the GDP growth rate of the US while the EU is in recession with a fall in GDP. Since the EU and US are China’s biggest and 2nd biggest trade partners, the declining EU GDP and the sluggish US GDP growth create difficulties for China. However, China increases its trade with ASEAN and with Africa, its 3rd and 4th biggest trade partners, by double digits each year and by triple digits every 5 years. It has similar growth patterns with other developing nations in Latin America, the Middle East, and the Pacific.

As an example, China completed a rail link recently through Kazakhstan that will allow rail shipment of goods from Shanghai to Duisberg, Germany, in 15 days. Google Maps with the photo option shows Chinese freight trains travelling through Kazakhstan to western destinations. In addition, China’s current 5 year plan (2011 to 2015) calls for development of the center, west, and north, and that is away from the coastal areas, so western economic writers may not have established the contacts that they need in the new development regions. That may account for their mistakes in understanding China’s growing economy.

Jul 11, 2013 7:18pm EDT  --  Report as abuse
Janeallen wrote:
If Japan does that,
it would be like Hitler telling the Jews that they caused the 1929 world wide economic slowdown!
Don’t chuckle. No only did it actually happened. Hitler was even nominated for a Nobel Peace Prize, based on his cleverly devious, well disguised rhetoric.

Read Revenge of Geography by Kaplan. Hitler’s development of his philosophical underpinning for the persecution of Jews was hinged upon adopting Japan’s philosophical explanation of why it waged war against China in WWI, and why it prepared and justified waging war — all these philosophical ideas were the foundation of Hitler’s justification of launching concentration camps, while Germans trained Japanese in warfare tactics and in the training of soldiers.

What Abe is proposing economically and in the proposed changes in Constitution is founded upon philosophies that profoundly influenced Adolf Hitler during Hitler’s time in prison, and while he was writing Mein Kampf. Abe and the sitting Japanese minister’s official veneration of the Yasukuni Shrine are clear declaration that they are following the philosophies of the then Japanese militarists, whom Hitler modeled upon in devious rhetoric( much of which was hidden from ordinary Germans who had no knowledge of the concentration just like most Japanese voters, particularly the young right wing ones, have no knowledge of how that traditional Japanese philosophy don’t know of the heinous war crimes that Abe is whitewashing).

The world is at danger, when Japan is at danger. Japan is at danger because of these Japanese diplomats misleading the G8 countries based on old defunct ideas, longstanding racism against non-Japanese Asians cultivated, promoted, and encouraged by Japanese diplomats for over a century— all documented in James Bradley’s book, Imperial Cruise. Yes. Japanese people tend to misunderstand James Bradley’s book as blaming the United States for promoting Japanese aggression. However, the facts speak for themselves.
America did not intend Japan to oppress Korea, but instead, provide the kind of democracy Japan is giving to its own people now — Japan changed the agenda, and had to intercept messages from the Korean Emperor to Teddy Roosevelt.

Why did Japan have to intercept the messages, if Teddy Roosevelt really agreed with what Japan was doing in Korea? Because Teddy Roosevelt did not condone what Japan did in Korea as the Japanese told James Bradley,
JUST AS WHEN JAPANESE INTERCEPTED BY MESSAGES TO BARAK OBAMA, MEANT THAT OBAMA WOULD NOT HAVE AGREED WITH JAPAN’S STANCE.

Jul 13, 2013 8:25pm EDT  --  Report as abuse
PPlainTTruth wrote:
Go ahead, and Japan will find that the world will start lining up to protest Japan’s egregious manipulation of currency.

MASS PROTESTS AND BOYCOTT OF JAPANESE GOODS WILL BE EASY.
I have not bought anything that is Japanese made for a year.

It is easy. It makes me feel clean, and far from the immoral values of Japan, and predatory nature of Abe. I HIGHLY RECOMMEND TO EVERYBODY WHO WANTS A BETTER, HEALTHIER, MORE HONEST WORLD,

THERE CAN BE NO OTHER WAY TO PROMOTE WORLD PEACE EXCEPT TO EXPOSE THE ROLE OF JAPAN IN THE FORGING OF THE WORLD WAR I AND WORLD WAR II, AND ECONOMIC WORLD WAR II IN THE MAKING, TO THE DETRIMENT OF THE WORLD.

The world has to adjust the growth because Japan is the predator.

OF COURSE THE PREDATOR HAS TO MAKE FALSE ACCUSATIONS — that is the tradition of all those leaders at Yakusumi shrine.

HUNDREDS OF MILLIONS OF VICTIMS OF JAPAN WHO HAD NOT RECEIVED JUSTICE, WHO ARE ACTIVELY DEFAMED, AND CONTINUE TO SEE THEIR CHILDREN, GRANDCHILDREN, NEPHEWS, NIECES, GRANDNEPHEWS AND GRAND NIECES SUBJECTED TO DEFAMATION BY REUTERS JAPAN, AND ABE AS WELL AS THE RESTORATION PARTY.

THEY WILL BLESS THEIR CHILDREN AND GRANDCHILDREN FROM THEIR GRAVES AGAINST THE WAR CRIMINAL TRACK THAT ABE IS PRESSING THE G20 TO TAKE.

JAPAN STOLE MY COMMUNICATION AND CONTINUES TO DISTORT THE ROLE OF AMERICANS AS WELL AS CHINESE IN WWII.

IF THE COUNTRY DOES NOT REPENT, ANOTHER NATURAL DISASTER, WORSE THAN FUKUSHIMA WILL PUNISH JAPAN. THERE IS JUSTICE, EVEN IF JAPAN MANAGED TO MANIPULATE THE IMPERIALISTS TO SIDE WITH RACISM BASED ECONOMIC POLICIES AGAINST JAPAN’S VICTIMS.

Jul 13, 2013 8:46pm EDT  --  Report as abuse
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