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International relations

US and China on cusp of new cold war, Abe deputy says

Japan's Aso also warns of digital yuan seeping into Belt and Road

Deputy Prime Minister Taro Aso, seen here at a parliamentary seesion in November, expects tensions between the U.S. and China to persist even after U.S. President Donald Trump leaves office. (Photo by Uichiro Kasai)

TOKYO -- The U.S. and China are headed toward a cold war, Japanese Deputy Prime Minister Taro Aso said Monday, predicting that tensions between the two superpowers will persist even after President Donald Trump leaves office.

"Future historians will say that the Reiwa era" -- Japan's current Imperial era, which began in 2019 -- "was the beginning of a new cold war between the U.S. and China," Aso said at a meeting in Tokyo.

"Some newspapers wrote that things will change when there is a new president in the U.S., but that's not true," he added. "The current atmosphere in the U.S. Congress wouldn't allow it."

Aso also expects international fallout from China's plan to issue its own digital currency, which would be a first among major economies.

"The People's Bank of China says the currency will only be used domestically for retail [banking], but it will likely be used in the Belt and Road as well," he said, referring to Beijing's strategic investments in building infrastructure across many nations.

"We should be prepared for the currency to be used in international transactions," he said, warning of problems for entities that conduct currency transactions using the U.S. dollar.

Regarding Japan's monetary policy, Aso said "ultralow interest rates won't go away easily." Aso doubles as finance minister in Prime Minister Shinzo Abe's government.

Bank of Japan Gov. Haruhiko Kuroda also spoke at the gathering.

"There's no change in our need to stay vigilant over international developments, given the sudden increase in tensions over Iran and other factors," the central banker said.

"There are some bright signs for the global economy, such as the progress in information technology coordination," Kuroda said. "But we cannot let our guard down for the foreseeable future given trade issues between the U.S. and China, uncertainties in emerging economies and geopolitical risks."

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