- Japanese finance chief Aso said China's plans lacked detail
- Other nations welcomed Chinese program to stabilize economy
Japan was left isolated among Group of 20 nations after Finance Minister Taro Aso criticized a Chinese plan to stabilize its financial markets.
While most policy makers at a two-day meeting in Ankara publicly welcomed China’s explanation of how it plans to minimize the disruption from its economic transition, Japanese Finance Minister Taro Aso said the presentation was too short on detail to be useful. Aso was the only delegate to complain about the plan, according to two officials at the talks who asked not to be named.
“The issue with China is overblown,” Saudi Arabia’s central bank Governor Fahad Al-Mubarak said in an interview with Bloomberg Television in Ankara. “We’re confident that China is on the path of reform.”
China came into the talks on the defensive after the bursting of an equity bubble and a currency devaluation had roiled emerging markets around the world last month. Central bank governor, Zhou Xiaochuan, explained to his counterparts that Chinese officials were taking action to stabilize the country’s financial system and said he saw no reason for the currency to fall further in the long term.
That wasn’t good enough for Aso.
“They may have tried to be constructive,” the Japanese finance chief told reporters on Friday night after the first day of talks. “But they weren’t detailed enough.”
Asked on Saturday if he felt lonely in his view, Aso said, “Not at all.”
Aso said he’d had a detailed discussion with China’s central bank governor on the second day of the meeting. This is the first time that China has been questioned so thoroughly over its economic policy and a “good opportunity” for China to learn just how much interest there was in the market meltdown, he added.
Aso’s comments reflect the often-strained nature of Sino-Japanese relations since President Xi Jinping and Prime Minister Shinzo Abe both came to power in 2012, with a territorial dispute in the East China Sea and differences over Japan’s wartime past fueling tensions. Last week Xi oversaw a military parade to mark the 70th anniversary of the end of World War II held on a holiday that China called Victory of the Chinese People’s Resistance Against Japanese Aggression.
Still, there have been some signs of improving relations in recent months, with Xi meeting Abe on the sidelines of a conference in April and the countries making progress on holding a trilateral summit with South Korea as soon as next month.
The Chinese delegation was left puzzled by Aso’s carping.
“The atmosphere was very good,” Zhu Jun, head of the international department of the Chinese central bank, said in an interview Saturday. “I think most of the participants had very frank and constructive discussions with us. Not only with us but also with each other.”
Following the talks, China joined a pledge by all 20 members to avoid getting dragged into tit-for-tat currency devaluations and shift toward a more market-based exchange rate system. Aso said that although the G-20 statement didn’t mention China by name it was clear that the group’s concerns about market volatility were directed at officials in Beijing.
The last time the G-20 made such a pledge, in 2013, Japan’s currency declines were in the spotlight.
The surprise decision to revalue the yuan caused China’s currency to drop the most in 21 years last month, triggering exchange rates to fall elsewhere in the emerging world on concern that a weaker yuan will hurt countries exporting to China.
Capital flows into such emerging-market economies dropped in August by the most since 2013, according to the Institute of International Finance. Meantime, Morgan Stanley this week cut its growth forecast for emerging markets in 2015 to 4.1 percent from 4.8 percent amid downgrades for China, Brazil and India.
“China is definitely trying to play a constructive role,” Canadian Finance Minister Joe Oliver said in an interview Friday. “It is the second-largest economy in the world and so when it slows down it has global implications. That is I think what we are dealing with.”