Japan may press China on slowdown, shadow banking at G20

Thu Jul 11, 2013 9:12am EDT
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By Tetsushi Kajimoto

TOKYO (Reuters) - Japan may press China at a global meeting next week for more information about a slowdown in the world's No. 2 economy and risks posed by its "shadow" banking system, Tokyo's top financial diplomat said on Thursday.

Global financial markets have been gripped by concern over faltering growth and financial stability in China, in addition to worries over capital outflows from emerging markets, as investors anticipate the U.S. Federal Reserve will wind down its monetary stimulus.

Both issues are likely to be discussed when finance chiefs from the Group of 20 big industrial and developing economies gather in Moscow on July 19 and 20, Mitsuhiro Furusawa, vice finance minister for international affairs, told Reuters.

"The situation in China is not necessarily clear, and it would be desirable to clarify various data and issues," Furusawa told Reuters in an interview.

"Everyone is not necessarily sharing information on regional shadow banking, and we are paying close attention to see what the real picture is in China," said Furusawa, who acts as Finance Minister Taro Aso's "sherpa" at global financial gatherings.

Grim Chinese exports data this week have some economists wondering if the economy can hit Beijing's 7.5-percent growth target.

Another concern is shadow banking, China's network of thousands of unofficial credit providers, pawn shops, trust firms and various other non-bank loan vehicles.

Credit rating agency Fitch says some 36 percent of outstanding credit in China, nearly $6 trillion, lies outside banks' loan portfolios, a huge pool of money which market participants find difficult to track and which could cause an ugly credit mess in a steeper slowdown.   Continued...

A businessman looks at his mobile phone as he walks in the financial area of Pudong in Shanghai May 30, 2013. REUTERS/Carlos Barria