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International Relations

Japan kicks off G-20 chairmanship, eyeing to bridge US-China rift

Government will push multilateral approach as host of Osaka summit in June

Bank of Japan Gov. Haruhiko Kuroda, left, and Japanese Finance Minister Taro Aso attend a meeting with Group of 20 counterparts on Jan. 17.   © Reuters

TOKYO -- Japan is positioning itself as an intermediary between the U.S. and China as the host of this year's Group of 20 summit, aiming to use its alliance with Washington and improving ties with Beijing to bring some resolution on trade and other issues.

As the feud between the world's two largest economies worsens, Japan hopes to make the G-20 once again a forum for international cooperation and advance its own interests in the process.

"Support for the international order based on cooperation and openness is under strain," Finance Minister Taro Aso said Thursday at a meeting of G-20 finance chiefs and central bankers. The event kicks of Japan's first chairmanship of the bloc and the leadup to the leaders' summit in Osaka in June.

While he did not criticize the U.S. or China by name, Aso warned that "protectionism and unfair trade practices lead to instability and perverse economic outcomes."

The U.S.-China rivalry has spilled beyond trade, threatening to become an all-out battle for supremacy in fields like intellectual property rights and national security. Meanwhile, U.S. President Donald Trump continues to dig in his heels on protectionism, and the G-20 summit could turn into a standoff between the U.S. and the other 19 members. The bloc abandoned its usual promise to oppose protectionist policies in the leaders' joint statement last year.

Intex Osaka, the venue of the G-20 leader's summit, is located on a man-made island in Osaka Bay. (Photo by Nozomu Ogawa)

Aso wants to take the G-20 back to its origins as a stage for international cooperation. In 2008, when he was prime minister, the member nations faced common threats from the global financial crisis and were much more willing to cooperate.

As this year's chair, Japan plans to stress the importance of G-20 as a framework. A key focus will be a multilateral solution to trade imbalances -- an attempt to convince other countries that the bilateral Trump approach will not work.

Japan was initially unsure whether the U.S. would agree to a multilateral discussion. But some American officials also believe Washington should not fixate on a bilateral approach, and conceded the point.

"Progress could soften the U.S. position" in bilateral trade talks with Japan, a Japanese official said.

Aso will work closely with Bank of Japan Gov. Haruhiko Kuroda, who has strong ties to overseas counterparts through his experience heading the Asian Development Bank, to shepherd the discussions.

Another key topic is infrastructure development in emerging economies. A number of countries in Asia and Africa have fallen into a debt trap through China's Belt and Road initiative, unable to repay Beijing for infrastructure projects. Development that ignores the host country's ability to pay risks widening economic turmoil.

The Japanese are pushing for a clearer picture on the debt held by emerging economies, as well as more transparency from both lender and borrower nations. They hope a focus on "quality" infrastructure development, where they see an advantage, will also help counter China's growing influence across Asia.

Aging populations are another concern. "Even though demographic changes have a negative impact on economic growth, economic growth could be stimulated by promoting capital accumulation and innovation," Kuroda said in a Thursday speech. Other likely topics for discussion include an international tax regime for information technology companies and financial regulations.

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