SHF2015丨Tatsuo Yamasaki

Last week, Japanese Prime Minister Abeannounced the “Partnership of Quality Infrastructure” in Asia. AIIB, which wasinitiated by China, also aims at promoting infrastructure in Asia withfund-raising and financial service programs. It is more than obvious that investmentin infrastructures has become the focus of financial cooperation in Asia.

After the two pleasant and productivemeetings between Leaders from Japan and China in APEC summit and Asian-Africansummit in 2014, the two countries are planning to resume financial dialoguethat was suspended after 2012. Besides, a sharp increase of tourists between thetwo countries has been observed in 2014. Japanese enterprises also see China asan important market and plan to expand the supply of goods to China. Along withthe booming economy, China has surpassed Japan on several aspects, includingconstruction of high-speed train system, development of civil aircrafts, aswell as capacity of nuclear power generation. Japan realized the potential ofChinese market, but was cautious about mobilizing money to China in 2014.

I believe that there are several ways inwhich Japan and China will develop further cooperation. First of all, toimprove infrastructure in Asia, AIIB will need strong financial support.However, the very issue could actually be solved under the framework of Asia DevelopmentBank, which has already formed a mature system that connected all the Asiancountries. In Latin America, it is proved that it is possible for different developmentbanks to co-exist. China also said that they expect AIIB and ADB arecompanions, not competitors. Therefore, it is possible for Japan to cooperatewith China without joining in AIIB.

Although Japan did not confirm theintention to become a founding member of AIIB, we kept a frequent communicationwith China to exchange opinions on the topics we are concerned with. Japan hassuggested that, considering the quantity of AIIB members, AIIB should conductstrict debt sustainability analysis to define insolvent countries that shouldnot be allowed to accept loans. As AIIB has not yet set up an efficient liaisonsystem, at least in near future, AIIB will not be able to have a quick responseto all investment programs proposed by its members. This is where ADB couldjoin in and offer a helping hand. Japan has also delivered proposals for ADB andAIIB cooperation to China. And the “Partnership for Quality Infrastructure”announced by Prime Minister Abe in May is definitely not against AIIB.

Both AIIB and Silk Road Fund will have asignificant influence on the integration and development of Eurasia.

As for the internationalization of RMB,China has been making great efforts to push RMB onto the world stage and becomea global reserve currency, in order to use SDRs which is currently calculatedfrom a basket Euro, Yen, British Pound and US Dollar. Japan eagerly expects that,for the good of world economy, China will free the conversion of its currencyand promote the use of RMB.

Japan and China has started cooperation andcommunication in various fields. President Xi Jinping just attended theChina-Japan Friendship Exchange Meeting in Beijing, and spoke to a delegationof 3,000 Japanese visitors. We expect that the improvement of the Japan- Chinarelationship will encourage Japanese investment in China, as well ascross-border direct investment in RMB. The two sides should also strengthentheir cooperation on ASEAN-related issues, protecting Asia from financial crisis.Specifically, China and Japan should act as leaders of collaboration in allspheres.