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China's stance on selling Japan bonds: once a lifeline, now a threat

Cross-holding deal from 2011 remains unrealized as tensions flare

China's holdings of Japanese government bonds leaves Beijing in a position to further weaken the yen.   © Reuters

TOKYO -- In retrospect, financial cooperation between China and Japan might have hit its high-water mark 10 years ago.

Those were different times. Investors concerned about the prospects of the euro due to the European debt crisis flocked to purchase the yen, spurring the currency to a superstrong exchange rate of around 80 to the dollar.

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