Top China delegate pulls out of IMF meet amid islands row

Reuters News

10/9/2012 9:08:03 PM - Reuters News

By Lesley Wroughton

TOKYO (Reuters) - The International Monetary Fund said on Wednesday that China's central bank governor will not lead the Chinese delegation at the IMF's semi-annual meeting this week, in what appeared to be a snub to host Japan.

Zhou Xiaochuan's failure to attend the meeting comes after relations between China and Japan have slumped to their worst in years over their competing claims to sovereignty of some islands in the East China Sea.

The row has been marked by violent protests and calls for boycotts of Japanese products in China. Japanese car makers, including Toyota Motor, later reported a tumble in auto sales in the world's biggest car market.

"We were informed two days ago that Governor Zhou's schedule might require him to cancel his lecture in Tokyo," an IMF spokeswoman said. "It has now been confirmed that his deputy Yi Gang will represent him."

Zhou had been set to deliver what amounted to a closing keynote lecture on Sunday.

"The Tokyo meeting is an extremely important international summit," Japanese Finance Minister Koriki Jojima said at a press conference. "It is deeply regrettable that the representatives of the (Chinese) authorities are not participating."

The IMF comments confirm a report on Tuesday by Chinese state news agency Xinhua that China's delegation will not be led by its most senior finance officials.

According to Chinese protocol, only the most senior officials usually lead such trips. China's delegation will be led by Yi Gang, vice head of the People's Bank of China, and Vice Finance Minister Zhu Guangyao, Xinhua said.

The disputed group of islands, called Senkaku in Japan and Diaoyu in China, are located near rich fishing grounds and potentially huge oil-and-gas reserves. Taiwan also asserts its sovereignty over the uninhabited islets.

Japan is scheduled to host the IMF and World Bank annual meetings for the first time in nearly half a century. About 20,000 people are expected to attend the events, which end on Sunday, making it one of the world's largest international conferences.

"If he (Zhou) is not coming, it is regrettable that a representative of the Chinese authorities does not participate in this important international meeting in Tokyo. At all events, Japan-China economic relationship is very important and Japan will continue to communicate with China from a broader standpoint," said a Japanese government official.

World Bank President Jim Yong Kim said in Tokyo on Wednesday that he had great faith Japan and China would find a way to cooperate in the future.

"SYMBOLIC"

Earlier this week, Xinhua also reported that China's state-owned banks Industrial and Commercial Bank of China (ICBC), Bank of China, China Construction Bank and Agricultural Bank of China, will not attend the IMF and the World Bank meetings.

Tim Condon, head of Asian research at ING, said Zhou's absence was a way for Beijing to express its displeasure over the islands row and would not have a material impact on the country.

"It's very symbolic and attention grabbing, but doesn't really inflict any economic harm," he said. "It would be very easy for China to escalate the matter if they wanted to and inflict economic damage."

Tokyo and Beijing have traded increasingly sharp words in the dispute, which has seen both countries send patrol boats to waters near the disputed islands, raising concerns that an unintended collision or other incident could escalate into a broader clash.

U.S. Secretary of State Hillary Clinton urged China and Japan to let "cool heads" prevail in the dispute.

Japanese Prime Minister Yoshihiko Noda said in late September that his country will not compromise on the islands, saying they were "an inherent part of our territory in light of history and also under international law."

Chinese state media say the islands have been "sacred territory since ancient times".

The dispute has bubbled as several Asian governments have argued over sovereignty of islands in the South China Sea.

But the Senkaku/Diaoyu row escalated in September when Japan bought the islands from their private owner to prevent fiery nationalist politician from buying them.

(Additional reporting by Kaori Kaneka in TOKYO: Koh Gui Qing in BEIJING; Editing by Neil Fullick)