Feb. 23 (Bloomberg) -- Japanese Prime Minister Shinzo Abe and President Barack Obama reaffirmed the importance of their alliance and played down potential differences on trade and currency as Japan’s concerns mount over an assertive China and North Korea.
In a meeting at the White House yesterday, Obama praised Abe’s efforts to revive Japan’s economy and didn’t mention the resulting fall in the yen, according to Katsunobu Kato, a cabinet official present at the meeting. Abe explained Japan’s plans to boost defense spending, while emphasizing he had no intention of escalating a territorial dispute with China.
Tensions have been rising in waters around the uninhabited islands known as Senkaku in Japanese and Diaoyu in Chinese, where ships and planes from Asia’s two largest economies have been tailing one another for months. A third nuclear test by North Korea has also sparked fresh security concerns.
“Japan is one of our closest allies and the U.S-Japan alliance is the central foundation for our regional security,” Obama told reporters after the meeting and before a working lunch.
U.S. officials have repeatedly said that the islands disputed with China fall under its security treaty with Japan, even though the U.S. takes no position on ownership of the islands.
Japanese Foreign Minister Fumio Kishida said Secretary of State John Kerry reiterated this position in a separate meeting they had later in the day.
“In view of the increasingly difficult security environment that surrounds us, Japan intends to carry out its responsibilities alongside the U.S.,” Abe told a press conference after the summit. He added that Japan would increase defense spending and was revamping a five-year defense plan to strengthen its capabilities.
Abe reiterated Japan’s position that there is no territorial dispute over the East China Sea islands, which it controls. Ties with China are important to Japan and he would welcome talks with Chinese Communist Party Secretary General Xi Jinping, he said.
Tensions over the islands flared in September when Japan bought three of them from a private owner, sparking violent protests in China that damaged Japanese businesses. Bilateral trade fell 3.3 percent last year to $333.7 billion, the first drop since 2009.
The U.S. and Japan also are focusing on the threat from North Korea following that country’s third nuclear test. At the White House, Abe said “we just cannot tolerate” North Korea’s continued testing of missiles and nuclear devices.
He and Obama agreed to cooperate on fresh measures, including financial sanctions, against North Korea, Abe said at his press conference.
On trade, Obama and Abe released a statement saying that abolition of all tariffs wasn’t a condition for joining talks on a regional trade agreement known as the Trans Pacific Partnership. Abe had made such an understanding a requirement for entering the talks, and told reporters in Washington that he wanted to decide on whether to enter the talks as soon as possible after briefing his ruling Liberal Democratic Party.
“I told the president that reviving the Japanese economy is the priority of my cabinet,” Abe said at a press conference. Abe, who plans bold monetary easing in a bid to escape deflation, said he and Obama had shared the view that reviving the Japanese economy would be significant for the U.S. and for the world.
Japan, the world’s third-largest economy, is struggling to escape three quarters of contraction through December and 15 years of falling prices. Abe has pushed the central bank to be more aggressive in combating deflation, and will replace the Bank of Japan governor and his two deputies next month.
He said yesterday he planned to confer more with his bank candidates and consult with his ruling coalition partner and opposition parties on the central bank nominations next week.
Abe’s plans for loose monetary policy have sparked criticism from German officials and some in U.S. industry, including Joe Hinrichs, Ford’s president of the Americas, have expressed concern about the fall of the yen.
The yen slid to as low as 94.46 per dollar on Feb. 11, a level unseen since May 2010, and traded at 93.27 as of 5:12 p.m. in Tokyo.
To contact the reporter on this story: Isabel Reynolds in Washington at email@example.com
To contact the editor responsible for this story: Peter Hirschberg at firstname.lastname@example.org