Coming a time when traders and analysts are looking with growing concerns toward Beijing, riddled by deja vu memories of the China-induced near-bear market of 2016 when in a similar episode China's credit impulse tumbled - something which even Pimco highlighted earlier this week, when it reposted a chart first shown here in February...
... worries that not all may be well in China - for the second time in two years - grew this morning after the country's Finance Minister, Xiao Jie, unexpectedly skipped a summit conference with his Japanese and South Korean peers on Friday to attend an "emergency domestic meeting", a senior Japanese finance ministry official said quoted by Reuters. The official told reporters during a ministry press briefing that Xiao's absence was not related to any diplomatic matters, adding that Xiao was expected to attend the Japan-China finance dialogue in Japan scheduled for Saturday. He did not elaborate on the nature of the minister's emergency meeting.
"I don't think this is rude," the official said, when asked about Xiao's absence. "I heard an emergency meeting was called and the Chinese finance minister had to attend," he said. "We can understand the situation. We don't see any deeper diplomatic meaning to this."
While of secondary importance, at the meeting of the finance leaders they agreed to resist all forms of protectionism, taking a stronger stand than G20 major economies against the protectionist policies advocated by Trump. The senior Japanese finance official said he did not see any diplomatic implications from Xiao's absence, saying the minister was likely to arrive in Yokohama Friday evening. With the US taking an increasingly hardline stance on free-trade, Asia's mega exporters among which China, Japan and South Korea have been seeking to ringfence themselves and promote regional trade agreements. More details from Reuters:
The trilateral meeting was held on the sidelines of the Asian Development Bank's annual gathering in Yokohama, eastern Japan. China's increasing presence in infrastructure finance and the threat that poses to Japan's economic influence in the area are expected to be a topic of debate at the conference.
A Japanese Ministry of Finance official said the Chinese delegation was represented by its deputy finance minister and a senior official from the Chinese central bank at the trilateral summit where finance officials from the three countries met and pledged to resist protectionism.
In an attempt to reduce the region's vulnerability to dollar swings, Japan also proposed forming $40 billion in bilateral currency swap arrangements with Southeast Asian nations that would allow it to provide yen funds in times of financial stress.
"We agree that trade is one of the most important engines of economic growth and development, which contribute to productivity improvements and job creations," the finance leaders and central bank governors of the three nations said in a communique issued after their meeting. "We will resist all forms of protectionism," the communique said, keeping a line that was removed - under pressure from Washington - from a G20 communique in March when the group's finance leaders met in Germany.
But back to Xiao's "emergency meeting" which took place just as prices of commodities traded in China plunged by the most in over a year, with iron ore falling limit down on Thursday, and then continuing to slide the next day, and with Chinese stocks falling to three-month lows as concerns about tighter financial regulations amid a crackdown on shadow banking weighed on banking shares.
Speaking to Reuters, an official in the news department of China's Ministry of Finance said that Xiao had missed the trilateral meeting, which took place on Friday morning, but that he had departed for Japan in the afternoon. The ministry official did not say why Xiao missed the meeting, prompting speculation among some desks that following the sharp decline in local asset prices, one or more Chinese financial institutions could be in trouble again, due to the latest commodity turmoil. Anyone hoping for more clarity on what transpired at said meeting is urged not to hold their breath.