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Commentary: Japan's purchase of Chinese bonds will benefit both Asian giants


09:12, December 22, 2011

BEIJING, Dec. 21 (Xinhua) -- Japan acknowledged Tuesday that it could buy up to 10 billion U.S. dollars worth of Chinese government bonds, a move that can be mutually beneficial for both Asian economic powerhouses.

Japanese Finance Minister Jun Azumi said his country and China would discuss the possibility of purchasing each other's bonds during Prime Minister Yoshiko Noda's visit to Beijing next week.

Tokyo could use 10 billion dollars of its foreign exchange reserves to buy Chinese bonds. It will be the first time for Japan to buy the yuan-denominated bonds.

The historic move will be of strategic importance for Japan, owner of the world's second largest foreign exchange reserves, to diversify its portfolio. It will also be of huge significance for China in promoting the international use of the yuan.

Out of Japan's huge reservoir of foreign exchange reserves, estimated at around 1.3 trillion dollars by the end of November, more than 70 percent is in dollar-denominated assets.

In the current times of uncertainty in international financial markets and debt crisis in the United States and Europe, putting eggs in only one basket is not a good idea for Japan. The country needs to diversify its portfolio.

Buying yuan-denominated bonds can lower Japan's exposure to risk, which is also in line with its traditional favor for lower-risk investments.

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helen at 2011-12-22203.82.80.*
Is Japan unloading Weimar US$ in China to buy Yuan and purchase Chinese bonds!?Many countries are seeking ingenious ways to unload Weimar US$ before the US$ Titanic sails its last journey .... And of course the United States is prohibiting others from recycling Weimar US$ back to the US!

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