UPDATE 1-Japan Kan: pressuring China on yuan not good

(For more stories on the Japanese economy, click [ID:nECONJP])

* Kan to meet Chinese Premier Wen Jiabao over the weekend

* International pressure building to let yuan trade freely

By Stanley White

TOKYO, April 2 (BestGrowthStock) – Putting pressure on China over its
currency isn’t necessarily a good thing, Japanese Finance
Minister Naoto Kan said on Friday on the eve of meetings with
Chinese Premier Wen Jiabao and his Chinese counterpart in

Some Group of Seven nations have pressured China to revalue
the yuan, which some economists say it keeps artificially low,
giving it an unfair export advantage and hindering more balanced
economic growth. [ID:nN22220946]

Beijing’s currency controls have been a major cause of
friction with the United States. A bipartisan group of U.S.
Senators has proposed legislation that could lead to tariffs on
Chinese exports if Beijing doesn’t revalue.

Kan’s comments on Friday didn’t deviate from Japan’s
established position that it’s better to work with China than to
confront it over the yuan, but his stance also shows how China’s
increasing regional influence has made other Asian countries more
reluctant to criticise its currency policy. [ID:nTOE62I033]

“Each Group of Seven country is considering this issue
carefully, and I realise the importance of this issue,” Kan told
reporters after a cabinet meeting.

“I’m also aware of the problems in the U.S. Congress, but
giving the perception of applying pressure isn’t necessarily a
good thing.”

Kan also said he wanted to exchange opinions based on Japan’s
experience with its bubble economy when he meets Chinese Premier
Wen Jiabao in Beijing. The meetings are the third in a series of
bilateral talks aimed at deepening financial dialogue between
Asia’s two major economic powers.

Kan also reiterated that he wants to prepare specific ways to
use 1 trillion yen ($10.7 billion) in reserves in the budget for
the fiscal year that started on Thursday. Japan’s Democratic
Party-led government is facing pressure to boost spending as its
approval ratings slump ahead of an election expected in July.

Japan’s debts are almost twice the size of its economy, which
makes it the most indebted among industralised nations and limits
fiscal policy.

(Editing by Edwina Gibbs)

UPDATE 1-Japan Kan: pressuring China on yuan not good