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Japan to buy $10.3b in Chinese govt bonds

By Wei Tian (China Daily)

08:21, March 14, 2012

Purchase will help Tokyo diversify foreign reserves from greenback

Japan announced on Tuesday that it has won Chinese authorities' approval to buy 65 billion yuan ($10.3 billion) in Chinese government bonds.

The move will help Japan diversify its reserves away from the dollar and strengthen ties between the two largest creditor countries in the world.

The timing of the purchases has not been set yet. A few months of preparation will be needed for the completion of technical procedures before the Chinese bonds can be bought, Jun Azumi, Japanese finance minister, told a news conference in Tokyo, according to Xinhua News Agency.

"We will consider trends in the financial markets to decide on a right time for the purchases," Azumi said.

He also suggested the initial purchases would be in small amounts and take into account conditions in Japan's foreign-currency assets.

"We think this ($10.3 billion) is an appropriate amount when you consider our common goal of strengthening economic cooperation between Japan and China," Azumi told reporters.

In December, the two countries agreed at a summit to promote trade in the yen and the yuan, as well as to invest in each other's bond markets.

Japan's announcement on Tuesday marks the first time it has given public information about the quota for purchasing Chinese government bonds.

The announcement also came after Chinese central bank officials said on Monday that China and Japan have "great potential" to work together in the fixed income market.

Yi Gang, vice-governor of the People's Bank of China and head of the State Administration of Foreign Exchange, said Japanese investors are welcome to invest in the Chinese bond market and that China would continue to buy Japanese government debt.

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