Japan to buy Chinese gov't bonds for first time

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  • -2

    garomakaikishi

    y now china will follow japan. my short strategy will pay off big time.

  • 0

    some14some

    extension of 'kizuna?' will create problems at later stage.

  • 0

    viking68

    Is this move to bring the economies closer?

    Or, is this move an indirect way to buy dollars and weaken the yen dollar exchange rate?

    I say indirect since the yuan is still pegged to the dollar with some growth allowed by China in the last two years. I believe the yuan appreciated 4.5% over that two year period, but has dropped 0.5% this year. Since the Chinese government decides the range at which the yuan can be traded, the recent drop has raised concerns that China is manipulating their currency...again.

    I tend to think it is the latter, which should avoid charges of manipulating the yen dollar exchange rate.

  • 2

    ironchef

    viking68 has it right..it is just a market manipulation tactic by Azumi, the former NHK broadcaster-turned-finance minister?!? wth.

  • 1

    garomakaikishi

    lol chinese said if the yen keeps going up it wond buy japanese government bonds. so now japan is saying they will buy chinese in order to get the chinese to buy the huge bonds which japan keeps issuing at peanut returns. its a joke really

  • 0

    warnerbro

    They obviously want to play a stronger hand than they can with their cards at home.

  • 1

    sfjp330

    The purchase of Chinese government bonds by Japan, though their value is less than 1 percent of the U.S. bonds it holds, has a symbolic meaning. This is a breakthrough in bilateral cooperation, Japan is sending a signal to China to buy Japanese bonds in return. Japan has to rely on China rather than private capital at home to buy government bonds. Japan wants Beijing to buy Japanese government bonds on a larger scale to help boost the Japanese economy.

  • 0

    sfjp330

    viking68Mar. 13, 2012 - 02:08PM JST. I say indirect since the yuan is still pegged to the dollar with some growth allowed by China in the last two years. I believe the yuan appreciated 4.5% over that two year period, but has dropped 0.5% this year.

    Where did you get this information? This is wrong. Chinese Yuan was 6.83 per U.S. dollar on February, 2010, now it is 6.30 per U.S. dollar. The adjustment of 7.4 percent appreciation from two years ago. The exchange rate has not dropped, and still is at 6.30.

  • 0

    peanut666

    The only danger is whether China actually will pay off the bonds in the future. They can sell them off at a discount internationally and screw Japan's investment thus manipulating their economy in the long run. Since the government controls the commercial market, I don't trust them. I've invested in Chinese stocks sold to the American stock market and it never shows a profit. However if you invest in HK or Taiwan, they seem to be self serving and do well. Culturally and socially in terms of negotiating bilateral economic ties it serves more of a good faith, good neighbor demonstration.

  • 0

    sfjp330

    peanut666Mar. 15, 2012 - 02:43AM JST. The only danger is whether China actually will pay off the bonds in the future. They can sell them off at a discount internationally and screw Japan's investment thus manipulating their economy in the long run. Since the government controls the commercial market, I don't trust them.

    Agree. In China, most people have no solid or systematic knowledge of international business rules. Most Chinese companies will not provide accurate transparency of their business. However, the increasingly intense contact between Chinese people and others help the rest of the world understand China more accurately. People are increasingly aware that China's economic growth and emergence is conducive to international development However, buyers be aware, they are still many years behind in international business rules.

  • 0

    Zenpun

    Buying China bond will prevent Japanese Yen appreciating against US dollars. Back in 1980s, market exchange rate was favourable to Japanese Yen. Due to the political pressure, Japanese Yen was appreciated because of heavy buying. Japan lost the export competitiveness like Greece and got a prolong recession. |n the past, Japan park the export surplus volume mostly in the US dollars.

    Current interest rate and depreciation of US dollar will not make sense for keeping all fish in the same bucket. When China Yuan get more appreciation and openess, Japan will get the higher return from bonds. It is a strategy of diversifing the investment. China has huge population and vast land. They still have to develop the inferior regions which has left behind. Their citizens have high saving and government has prudent monatery policy. China bond is more promisng than Eu aand US bonds. interest rate is more attractive too.

  • 0

    viking68

    I think I misquoted a recent news report discussing the movement over the last two years being 4.5% rather than the whole period it has been allowed to float.

  • 0

    viking68

    The article stated that a recent .5% drop may be challenged by the U.S. again as currency manipulation. The Chinese believe the currency has reached equilibrium.

  • 0

    peanut666

    What the Chinese say are the reasons for currency value vs. what the Chinese are doing with currency value are two completely different things. That is why Chinese bonds are a poor gamble. The Japanese know that they most likely won't get anything in return, but are doing this for two reasons. The first to show good faith between neighbors and hopefully China will buy Japanese bonds. The second if the investment proves negative, Japan will use it as an example why NOT to buy Chinese bonds, but rather Japanese bonds instead. It is a win-win situation either way. And in reality $10.3 billion isn't that much for a country that has over a trillion dollars circulating global per day.

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