Japan, China Ready to Help Europe Through IMF: Can They Alleviate the Looming Crisis?

Japan and China are committed to help resolve the European debt crisis through the International Monetary Fund, once euro region members take additional steps themselves, according to Japanese Finance Minister Jun Azumi.

“We shared the view that European countries need to do more, although (the situation), including Greece, is headed in a good direction,” Azumi said to reporters in Beijing.

“We can expect some sort of request from the IMF to those including the United States, Japan and China. We agreed that Japan and China will coordinate closely and will jointly respond to IMF,” he added.

The IMF proposed last month to boost its lending funds by as much as $500 billion to insulate the global economy against any deterioration of Europe’s sovereign crisis.

“Japan and China are prepared to support the IMF’s important role in addressing the European sovereign debt crisis, on the basis of further efforts by the EU and euro area members and in cooperation with G-20 and IMF members,” according to a statement issued by the Japanese finance ministry yesterday after Azumi and Wang met.

The meetings expanded the dialogue between the two largest economies of Asia after Japanese Prime Minister Yoshihiko Noda's visit to Beijing to meet Chinese Premier Wen Jiabao in December. The mood of the meeting was upbeat in contrast to the previous discussions which were characterized by intermittent tensions between the two over maritime boundaries. Azumi, who also met the Chinese Finance Minister Xie Xuren during his visit, said he asked China to make its currency more flexible. It is also reported that China and Japan will begin work this month to promote the direct exchange of their currencies.

Europe’s crisis has reduced the demand for exports from both China and Japan. China had earlier expressed its willingness to get more deeply involved in resolving Europe’s debt crisis as was stated by Premier Jiabao at a joint press conference with EU President Herman Van Rompuy on Feb. 14 in Beijing.

China and Japan, the world's second- and third-largest economies have not so far discussed on the specific sizes of their contributions to resolve the European debt crisis. Group 20 finance ministers will gather in Mexico on Feb. 25 and 26 to discuss the global economy as concerns over Europe's debt woes rise.

Meanwhile European Finance Ministers are meeting in Brussels Monday to close in on a 130 billion-euro ($170 billion) Greek bailout. Greece faces a looming deadline on March 20 when it needs to make repayments on a 14.5 billion euro bond, failing which it risks becoming the first country in the euro's 13-year history to default.