In stark contrast to the United States, Japan has taken a soft approach as it tries to convince China to let its currency appreciate, always saying that only Beijing can decide when the time is right. But analysts note a recent shift in tone. Japanese policymakers are now voicing more concern about delays and partial steps on China's part, which they think could exacerbate market speculation and threaten global economies.
"Japanese officials now feel that an inflexible yuan will hurt the Japanese economy as well at the US economy," said Takao Hattori, chief global strategist at UFJ Tsubasa Securities.
"They must be worrying about the magma exploding if Chinese action is delayed."
Japanese officials fear that too small a change in the yuan's tight peg to the dollar could fuel market speculation about further revaluations that could destabilise the global currency market and lead to a speculative rise in the yen, hurting Japanese exports.
They also worry that partial steps on the yuan, which Beijing currently pegs at around 8.28 to the US dollar, could harm the Chinese economy, Japan's biggest trade partner.
Against that background, Japanese officials have recently begun to stress that rather than a hasty, half-hearted revaluation, Tokyo wants Beijing to lay out a convincing road map for yuan reform.
"If we only see a small change in the yuan's trading band, it could fuel speculative pressure," a senior finance ministry official told Reuters.
He declined to say how big a widening in the yuan's trading band would satisfy the market, but he said presenting a medium-term strategy for the yuan reform would be one desirable option to increase predictability and stability. Tokyo, however, wants to steer clear of adopting the blunt style of the United States, whose demand for immediate action by Beijing is seen by many analysts as counterproductive.
For one thing, Japanese policymakers believe Washington's stance of effectively setting a deadline to change the yuan's narrow peg to the dollar could harden opposition within Beijing to the politically and economically risky move.
Washington is expected to keep up its heightened call for immediate action on the yuan at this weekend's meeting of finance ministers from Group of Seven industrial nations plus Russia.
But at a bilateral meeting between Finance Minister Tanigaki and US Treasury Secretary John Snow on Friday, the two countries' different approach to the yuan issue could be a talking point.
"Snow will probably be very vocal on the yuan," Toru Umemoto, chief foreign exchange strategist at Barclays Capital, said of the weekend meetings. "The US is putting too much pressure, and that will actually make China not move for a while."
In response to growing complaints by domestic manufacturers, Snow has effectively imposed a deadline of October for China to let the yuan rise in value or face the possibility of being named a currency manipulator, which could draw trade sanctions.
Japanese authorities question the wisdom of demanding a yuan revaluation as a means to reduce trade imbalances, as stressed by many US lawmakers who claim that the artificially weak yuan gives Chinese exports unfair advantage.
"We are saying the same thing but our reasons are different," a senior finance ministry official told Reuters.
Japan enjoys a trade surplus with China, and many Japanese firms, which depend on imports of cheap raw materials from China or have factories there, do not want to see the yuan appreciate rapidly.
But policymakers have begun to worry that too big a delay in yuan reform could only increase the risks for China.
"It is in China's interest to make a meaningful decision quickly," Japan's top currency diplomat, Hiroshi Watanabe, told reporters last week.
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