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MENAFN - AFP - 11/10/2012

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(MENAFN - AFP) China will "lose out" by not sending its top two finance officials to global economic talks in Japan this week, the IMF's chief said Thursday, weighing into a bitter dispute between the Asian giants.

Christine Lagarde called on Beijing and Tokyo -- embroiled in a spat over a chain of islands in the East China Sea -- to settle their row quickly, adding that "countries in this region are very important for the global economy".

"We have a lot of substantive issues to discuss, great debates, great seminars organised. I think they lose out by not attending the meeting," the head of the IMF said of China's absent finance minister and central bank chief.

China has not given official reasons for the no-shows at the annual meetings of the International Monetary Fund and the World Bank, but they come amid simmering tensions over Japanese-controlled islets.

The pull-outs also come as world leaders look to China -- the planet's second-biggest economy -- to help reinvigorate faltering global growth amid fears of a worldwide slowdown.

People's Bank of China Governor Zhou Xiaochuan had been due to deliver a lecture on Sunday, the centrepiece of the final day of the annual conference. He will now send his deputy, the IMF said.

The World Bank said it had been told the Chinese delegation would be led by the vice finance minister rather than Finance Minister Xie Xuren.

Several private Chinese banks were also reported to be limiting or cancelling their participation in events linked to the meetings, which began on Tuesday and will run until Sunday.

Commentators have pointed to the move as China showing its displeasure with Japan as the region's two largest economies squabble over islets called Senkaku by Tokyo and Diaoyu in China.

The uninhabited chain is located in rich fishing waters and believed to sit atop mineral deposits.

The dispute, which has rumbled for decades, flared in August and September with landings by nationalists from both sides and the subsequent nationalisation of the islands by Tokyo.

The diplomatic hostility has also begun to show signs of denting the pair's annual trade ties which topped 300 billion last year.

This week, Japan's three biggest automakers -- Toyota, Nissan and Honda -- said that their September sales in China plunged, while airlines in both countries have reported cancelled flights in the wake of the spat.

Japanese factories and businesses across China closed or scaled back operations in September over fears they or their workers could be targeted by mobs protesting Tokyo's nationalisation of the islands.

On Thursday, Lagarde said friendly relations were "beneficial" for Asia-Pacific growth and the broader global economy.

"All economic players and partners in this region are very critical for the global economy," she said.

On a lighter note, the IMF chief said the two Chinese officials would miss out on seeing Japan's spectacular autumn foliage.

"(China) will be missing a great meeting because Tokyo is at its best, the colours are beautiful, the trees have the most beautiful colours you could think of," she said in response to questions about the dispute.

When asked about Japan and South Korea's decision to end a currency swap agreement, which came against the backdrop of a separate territorial row, Lagarde again called for diplomacy.

"We would hope... that longstanding differences concerning territorial matters could be resolved smoothly so that economic co-operation can take over and contribute to the stability of the world and to this part of the world."

World Bank President Jim Yong Kim told a separate forum he was concerned about the effects of the disputes on the growth of global economy.

But, he added, he was hopeful differences would be resolved soon.

"The history and the current political situation (in East Asia) is very complicated, but my own view is that things will get resolved over the next few months."


 






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