TOKYO – China’s central bank governor and finance minister won’t be attending IMF and World Bank annual meetings in Tokyo this week in an apparent snub to Japan that comes as the two Asian giants remain at odds over a cluster of tiny islands both claim.
The International Monetary Fund said that People’s Bank of China Gov. Zhou Xiaochuan, who was scheduled to give the event’s closing speech on Sunday, had cited scheduling problems for his decision to cancel his Tokyo trip. The IMF said his deputy, Yi Gang, will represent him at the meeting and will deliver Sunday’s lecture.
China’s official Xinhua news agency published a report that said China’s delegations to the meetings would be headed by Yi and Zhu Guangyao, a vice finance minister. China’s central bank and Finance Ministry did not respond to requests for comment.
Experts said the move shows that China’s government is giving more priority to taking a stand on the territorial flare-up even if it could undermine Beijing’s past insistence that emerging economies should have a greater say in international financial policy-making bodies such as the 188-member IMF.
“China is sending a clear signal that this sovereignty dispute is important to China’s top leadership,” said Linda Jakobson, the East Asian program director at the Lowy Institute, a think-tank in Sydney. “It definitely overrides the decision-making on global financial matters.”
“I think other countries will be surprised by the decision,” she said.
Japan’s Finance Minister Koriki Jojima, who took on that role just 10 days ago, said it was “regrettable” that the two men weren’t attending, but added that “from the global perspective, we will continue to have communication with China.”
The dispute over the uninhabited islands in the East China Sea, which has triggered widespread protests in China and attacks on Japanese-owned factories and stores, already has spilled over into the economic arena, threatening a shaky economic recovery in Japan after last year’s tsunami and nuclear disasters.
Sales of Japanese cars in China plunged in September, with Toyota saying its sales of new vehicles there fell 49 per cent from a year earlier to 44,100 vehicles. Honda’s sales sank 41 per cent to 33,931 vehicles. Tens of thousands of Chinese tourists have cancelled trips to Japan.
China is Japan’s biggest trading partner, and economists warn that the dispute could erode Japan’s economic growth.
Toyota Motor Corp. and Honda Motor Co. dealerships were burned down in one Chinese city last month after Tokyo decided to nationalize the islets, called Senkaku in Japanese and Diaoyu in Chinese. The purchase from the islands private Japanese owners was meant to block a potentially more inflammatory plan by Tokyo’s nationalistic governor to buy and develop them.
The move nonetheless angered China, which warned of “serious consequences” and has sent marine surveillance ships near the islands in recent weeks. The rocky outcroppings are surrounded by potentially large undersea natural gas fields and rich fishing grounds. They are also claimed by Taiwan.
Beijing may have also been willing to hold back its top financial officials from the IMF and World Bank meetings because the European debt crisis remains a primary concern — an issue somewhat removed from China, said Robert Dujarric, a scholar at Temple University’s Japan campus.
“Whatever is to be done about the euro crisis isn’t going to be decided in Beijing,” he said.
“From the perspective of senior Chinese officials, they don’t want to be seen in Japan or in any way being soft on Japan,” Dujarric said. “This crisis with Japan — and indirectly with the U.S. — is more important to them than the IMF,” he said.
Under a security pact with Japan, some 50,000 U.S. troops are stationed in Japan. While Washington has said it remains neutral in the island dispute, American officials have also said that the islets fall under the security treaty that obliges the U.S. to protect Japanese territory.
Chinese central bank governor and finance minister hold important positions, but they generally don’t wield as much power in domestic decision-making as their counterparts in other countries. Most major financial decisions require approval by the communist party leadership.
“This decision (not to attend) was likely made above the heads of these finance officials,” Jakobson said.
China, with its growing middle class, was one of the emerging markets that Japanese companies were counting on to boost sales amid a long stagnation in their domestic market and sluggish global growth.
Some officials are holding out hope that Japan and China will eventually repair relations.
“As an Asian American, I’ve watched with great admiration the economic rise of first Japan and then Korea and China,” said World Bank president Jim Yong Kim. “The more I learn about the integrated economies of this region it strikes me that the nations of this region have much more in common than they have in difference.”
AP Business Writer Elaine Kurtenbach contributed.