China finance chiefs to skip Japan IMF meetings

Two of China's most senior finance officials will skip International Monetary Fund meetings in Japan, the Fund and a report said Wednesday, as Tokyo and Beijing remain locked in a diplomatic row. The news is the latest indication that a spat over uninhabited, but possibly resource-rich, islands has spilled over from the political into the economic realm. People's Bank of China Governor Zhou Xiaochuan, who had been due to deliver a lecture on Sunday, the centrepiece of the final day of the annual conference, will now send his deputy, the IMF said. "We were informed two days ago that Governor Zhou's schedule might require him to cancel his lecture in Tokyo," a Fund spokesman said. "It has now been confirmed that his deputy Yi Gang will represent him at the IMF-World Bank Annual Meetings and will deliver his Per Jacobsson Lecture."Finance Minister Xie Xuren has also pulled out of the meetings, Kyodo News said, citing an unnamed Chinese official. China's state-run Xinhua news agency reported that the Chinese delegation to the IMF and World Bank meetings "will be led by Yi Gang, vice governor of the People's Bank of China, and Zhu Guangyao, vice minister of finance". Its report Tuesday did not mention Zhou or Xie, but an official from the central bank confirmed that Zhou would not be in Tokyo. "Yi Gang, the deputy governor went to Tokyo, but Zhou Xiaochuan, the governor didn't," he told AFP. When asked about possible reasons, he said: "Zhou has a tight schedule and he doesn't have time." The pull-outs come as Tokyo and Beijing remain at loggerheads over the sovereignty of a Japan-administered island chain in the East China Sea that both countries claim. The dispute, which has rumbled on for decades, flared in August and September with landings by nationalists from both sides and the subsequent nationalisation of the islands by Tokyo.They also come after several private Chinese banks were reported to be limiting or cancelling their participation in events linked to the IMF and World Bank meetings, which began on Tuesday and will run until Sunday. Japan's top government spokesman, Osamu Fujimura, told a regular news conference Tokyo was disappointed. "The Tokyo meeting is an important meeting. We would very much regret it if the representatives of the authorities do not take part," he said. "Since economic exchanges between Japan and China are important, our country will take a broader view and continue to try communicating with China." The countries have a two-way trade relationship well in excess of $300 billion a year. Sometimes-violent protests rocked Chinese cities in September in the wake of Tokyo's purchase of three of the islands, known as the Senkakus in Japan and the Diaoyus in China. Japanese businesses and diplomatic missions were targeted by mobs, with some factories and shops shuttering their operations. Firms with operations in China reported a tightening of customs regulations and difficulties in getting visas for foreign staff, in what commentators said was China's way of making its displeasure known. Japan's top three automakers said Tuesday their sales in China plunged in September, with Toyota reporting they had shifted half as many vehicles as in the same month last year. Toyota -- the world's largest car firm by sales in the first half of the year -- and Honda both said Tuesday they would continue "adjusting" production in China as reports said automakers plan to roughly halve output at their facilities there. It was reported last week that big Japanese insurers have stopped covering firms against riots in China, in a move seen likely to hit investment in the country.