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FPCJ invited Mr. Toyoo Gyohten, President of the Institute for International Monetary Affairs, to talk about the Chinese Economy and Japan. Including 21 foreign journalists, a total of 39 people attended this briefing. 

Mr. Gyohten first said that on the occasion of the global financial crisis China had drastically increased its international significance and established itself as a challenger to the American hegemony. 

He then gave his view on China’s future policy in the field of international finance: while basically rejecting the American unipolar domination, China would take completely pragmatic measures for the time being. As two pillars of China’s immediate international monetary policy, Mr. Gyohten listed:
1)the strategic use of the present system centering on the U.S. dollar ( meaning that China would assume the continuation of this system for several decades more, and continue to control the Renminbi (RMB) exchange rate to maintain its own export competitiveness), and
2)the internationalization of the RMB (that would become a reality, Mr. Gyohten said, only when the current transactions and issuing of receivables in the RMB were promoted, China introduced a completely free rate system and established a fully-compatible system including the liberalization of capital transactions, and the RMB market was developed ). 

While saying that if the whole of China continued to be developed and reformed as it had been, the role of the RMB would become important in ten years, Mr. Gyohten also pointed out a new problem that China had, especially as a result of its large-scale investment after the Lehman shock. Citing the restoration and expansion of the public sector and others, he called the problem “backtracking on reform.” He also mentioned the absence of a road map to realize free elections, independence of the judiciary and freedom of thought and expression in China despite the increasing domestic demand for political and social reform. In consideration of these, he described China as a bicycle continuing to run at high speed with both great potential and also great risk.

Lastly, after saying, “Because China is the most important economic partner for Japan, it will mean a great deal how China will develop and how the RMB will develop to become an international currency,” and “It is important for Asia, and indeed, the whole world, that the number one and the number two economic powers in Asia maintain a peaceful relationship,” Mr. Gyohten hoped for China to become a country reassuring and trusted by other Asian countries. 

The Q&A session dealt with various topics including the possibility for the Indian rupee to become an international currency, the recent passage of the sanction bill against China in the U.S. Senate, the discussion in the G20 meeting about the transformation of the international financial system, and the attitude that the Japanese government should take regarding the current yen exchange rate.

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