Japan, China look to trade talks, debt buys

Sun Dec 25, 2011 5:27pm EST
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By Kiyoshi Takenaka

BEIJING (Reuters) - Japan and China agreed to start formal talks early next year on a free trade pact that would also include South Korea, Japanese Prime Minister Yoshihiko Noda said on Sunday after talks that showed the deepening bonds between Asia's two biggest economies.

Japan also said it was looking to buy Chinese treasury debt, and the two governments agreed to enhance financial cooperation.

"On a free trade agreement among Japan, China and South Korea, we've made a substantial progress for an early start of negotiations," Noda told reporters after his meeting with Premier Wen Jiabao.

China's central bank, the People's Bank of China, said on its website (www.pbc.gov.cn) that the two leaders agreed to strengthen bilateral financial market cooperation and "encourage the use of the renminbi and Japanese yen in international trade transactions between the two countries."

The renminbi is another name for China's yuan currency.

The trade talks announcement builds on an agreement between the three countries last month also to seek a trilateral investment treaty and finish studies on the proposed free trade agreement by the end of December so that they could start formal negotiations on the trade pact.

"China is willing to closely coordinate with Japan to promote our two countries' monetary and financial development, and to accelerate progress of the China-Japan-Republic of Korea free-trade zone and East Asian financial cooperation," Wen told Noda at the meeting, according to Chinese Foreign Ministry's official website (www.mfa.gov.cn).

But the regional trade negotiations could also compete for attention with Washington's push for a Trans-Pacific Partnership (TPP), after Japan said last month it wants to join in the talks over the U.S. proposal.   Continued...