China may be courting Japan to cooperate with belt and road to allay controversy after yuan clearing deal
- The People’s Bank of China last month named MUFG Bank as the first yuan clearing bank in Japan, and only the second non-Chinese bank after JPMorgan
- President Xi Jinping’s Belt and Road Initiative has received criticism over the skyrocketing costs of many of its projects as well as claims of corruption
China’s decision last month to allow a Japanese bank to clear transactions valued in yuan raises the prospects of increased economic cooperation between the two countries, especially as China seeks to involve new countries in the Belt and Road Initiative in an attempt to fend off criticisms of its projects, analysts said.
The People’s Bank of China last month named MUFG Bank as the first yuan clearing bank in Japan, and only the second non-Chinese bank after JPMorgan last year, to be allowed to clear and settle yuan-denominated transactions.
The selection of Japan’s largest bank to clear yuan transactions is the latest step in the warming of economic relations, and comes as Beijing makes changes to its belt and road strategy to improve lending practices and the quality of the infrastructure projects that connect Asia with Africa and Europe. The Belt and Road Initiative is President Xi Jinping’s plan to grow global trade.
However, if Japan begins to cooperate with the initiative and is able to influence the quality of investments and reduce funding risks, China could potentially allay such criticism, according to Tobias Harris, senior vice-president at global CEO consulting and advisory firm Teneo.
