CBSN

Japan, China To Meet On Economy

After months of acrimony between China and Japan over Tokyo's faltering economy, senior Chinese and Japanese officials will hold a daylong meeting Monday in the first attempt to cope with the crisis together.

Japanese Deputy Foreign Minister Koichi Haraguchi and Chinese Vice Foreign Trade Minister Sun Zhenyu will lead delegations of trade and finance officials.

China's economic growth this year may not reach the government's target of 8 percent, but it is bound to exceed Japan's, which has shrunk for three consecutive quarters.

China was once dubbed the "sick man of Asia" when compared with economic dynamos like Japan, but now it is Tokyo that ails, while Beijing's economy surges ahead.

Thanks to government controls, China's currency has been cushioned from the volatility that has stricken other Asian financial markets. But Tokyo's economic woes are troubling for China because its island neighbor is its largest trading partner and one of its biggest investors.

As a result of Japan's decline, China's exports to the country fell 4.3 percent in the first half of 1998 over the same period last year, according to Chinese customs statistics. And Japan's direct investment in China declined 30.7 percent in the first half.

Japan's slack demand for Chinese exports is dragging down China's economy just as China's state industries lay off millions of workers to adjust to market-style reforms.

State banks are now swamped with bad debts, and the government is having trouble providing jobs or welfare payments for laid-off workers.

President Jiang Zemin was forced to cancel an official visit to Japan last week because of floods in China, but he has stressed the importance of Monday's gathering.

Ties between the countries have improved in recent years. However, distrust lingers from Japan's brutal 1931-1945 occupation of much of China.

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