Part of the general move of the current govt to exit deflation via weakening the yen, as previously discussed. Look for Japan to be increasing total fx reserves, and in multiple currencies. The only thing that might stop them is being called on it by the US Treasury secretary.

Japan to purchase 65 billion yuan in China government debt

By Stanley White

March 13 (Reuters) — Japan said on Tuesday it had received approval from China’s government to purchase 65 billion yuan ($10.3 billion) in Chinese government debt in a move that can help Japan diversify its reserves away from the dollar and strengthen economic ties between the two Asian countries.

The timing of purchases hasn’t been set yet as Japan still needs to make some administrative preparations, but Japan is likely to start with a small amount and then increase purchases, Japan’s Finance Minister Jun Azumi said.

Japan will also consider the impact on financial markets when it decides the timing of its purchases, Azumi said.

China said on Monday it would continue its purchases of Japanese government debt but would reduce purchases when the yen is rising as China and Japan, holders of the largest and second-largest currency reserves, look to limit exposure to the dollar.

“We feel this is an appropriate amount when considering our mutual goal of strengthening economic cooperation between Japan and China,” Azumi told reporters.

Japan and China agreed at a summit in December to facilitate trade between the yen and the yuan as part of a broader push to strengthen economic cooperation.Japan said on Tuesday it had received approval from China’s government to purchase 65 billion yuan ($10.3 billion) in Chinese government debt in a move that can help Japan diversify its reserves away from the dollar and strengthen economic ties between the two Asian countries.

The timing of purchases hasn’t been set yet as Japan still needs to make some administrative preparations, but Japan is likely to start with a small amount and then increase purchases, Japan’s Finance Minister Jun Azumi said.

Japan will also consider the impact on financial markets when it decides the timing of its purchases, Azumi said.

China said on Monday it would continue its purchases of Japanese government debt but would reduce purchases when the yen is rising as China and Japan, holders of the largest and second-largest currency reserves, look to limit exposure to the dollar.

“We feel this is an appropriate amount when considering our mutual goal of strengthening economic cooperation between Japan and China,” Azumi told reporters.

Japan and China agreed at a summit in December to facilitate trade between the yen and the yuan as part of a broader push to strengthen economic cooperation.

6 Responses

  1. I wonder what the Chinese are using to buy those notes? Don’t think they have any excess yen lying around.

      1. @WARREN MOSLER,

        Historically, Japanese companies have used dollar earnings to invest overseas. Why should they want to change that to invest in a currency with a dollar peg?

  2. Part of the continuing race to the bottom?
    Anything except unleashing creativity of domestic consumers/producers by reducing taxes? Financial markets are becoming the tail wagging national populations worldwide. Not only more trouble than they’re worth, but actually out of control.

    What’s keeping other industries from reigning in the cowboy financiers?

    That would be reminiscent of the Greeks reigning in the sophists, who only played clever games with words, instead of having words serve real public purpose.

    In both cases, the difference between theory & reality is greater in reality than in theory. Eventually, reality refuses to go somewhere where theory is trying to drag it. Only then does dogmatic theory have to adjust. In this case, creative accounting finance will adapt once more people stop using it.

    1. @roger erickson,

      Ravi Batra examines history including economic history in terms of the mindset of the ruling elite. We are now in an age of acquisitors in West and during an acquisitive era those of intellectual mindset who are ambitious ally themselves with the ruling acquisitors and provide the sophistical justification for their rule based on “expert knowledge.” Nothing new to see here.

      I recall someone over at gang of 8 saying that a requirement for getting a high position at a central bank is not understanding central banking.

  3. Something is happening between Japan and China. Could the recent devaluation of Yen be helped by China, in exchange of the Chinese bond purchase by the Japanese?

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