February 6, 2010 / 4:43 AM / 11 years ago

UPDATE 1-Japan tells G7 Tokyo focusing on China

* Finmin Kan: G7 spent much time debating Greek debt problem

* Kan: France circulated proposal on G7 reform, no conclusion (Adds details, background)

By Leika Kihara

IQALUIT, Canada, Feb 5 (Reuters) - Japanese Finance Minister Naoto Kan told his Group of Seven counterparts on Friday that Tokyo was focusing on China’s economy as it was showing signs of a bubble.

He also said that the G7 finance ministers and central bank governors spent much time discussing Greece’s financial problems at a working dinner on Friday which kicked off a two-day G7 gathering in the Arctic town of Iqaluit, Canada.

“I said Japan’s focus was on China’s economy as there were some signs of a bubble,” Kan told reporters after the dinner, adding that there were no objections when he explained Tokyo’s view that stable Chinese growth was necessary.

He did not say whether there was any specific talk on the Chinese yuan. Beijing has continued to shrug off pressure from its major trading partners to let the yuan appreciate, repeating its line that stability is in everybody’s best interests.

The G7 finance leaders also discussed Greece’s financial woes, with much time spent on how much role the International Monetary Fund and the European Union should each play in seeking a solution to the problem, Kan said.

Kan also said France circulated its own proposal on G7 reform as a basis for debate, but that no conclusion was reached at the working dinner.

The finance leaders of the G7, which comprises Britain, Canada, France, Germany, Italy, Japan and the United States, officially started their meeting with the working dinner. They are unlikely to issue a joint communique when talks finish on Saturday.

Kan, who took over as finance minister last month, had earlier said he would closely watch any G7 debate on the yuan as it could affect Japan’s economy, which is heavily reliant on exports to fast-growing Asian nations like China. [ID:nTOE60D04W]

Canada has said the G7 may discuss the need for a more flexible yuan, among other topics, at the meeting.

But the G7 has little leverage with China, which sits at the larger G20 table of industrial and emerging powers. The G20 has been overtaking the G7 as the prime forum for global economic matters.

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