Japan and China leaders to hold bilateral talks

Hanoi-HANOI (Reuters) - Japanese Prime Minister Naoto Kan and Chinese Premier Wen Jiabao will meet on Friday, Japan’s public broadcaster NHK said, a step expected to ease tensions between Asia’s biggest economies.

NHK said the leaders were set to meet some time after 8 a.m. ET on the sidelines of a regional summit in Vietnam.

Ties between China and Japan deteriorated last month following the detention of a Chinese fishing boat captain by the Japanese coast guard after their boats collided near disputed islands in the East China Sea.

Speculation has swirled over whether the two leaders would hold direct talks during the Asia-Pacific summit in Hanoi, with hopes for defusing tensions raised after their foreign ministers agreed to improve ties during a meeting earlier.

Japanese Foreign Minister Seiji Maehara told reporters his hour-long meeting with his Chinese counterpart, Yang Jiechi, was held in a “very good atmosphere, in a calm and in a forward-looking manner.”

The dispute over the boat captain, detained near the disputed islands, is the latest in a string of rows to strain ties between the neighbors.

A Japanese Foreign Ministry official said both sides repeated their claims to the uninhabited isles, called Senkaku in Japan and Diaoyu in China.

Maehara also said he had expressed Japan’s concern about China’s policy on rare earths, and that Yang assured him China would not use the minerals as bargaining tools.

Chinese restrictions on the export of rare earth minerals, vital for the manufacture of high-tech goods, and over which China has a near-monopoly on global production, have also alarmed Japan and other countries around the world.

U.S. Secretary of State Hillary Clinton, who will join the summit of 16 Asian countries on Saturday, called for China to ensure the rare earth trade would continue unabated.

Clinton, in a speech on U.S. Asia-Pacific policy in Honolulu, denied that the United States was seeking to contain China as she sought to strike a balance between the U.S. desire to work with Beijing and its concerns about some Chinese policies.

“China said that it will not use this as a bargaining tool and that it is based on the Chinese view of protecting the environment and managing resources,” Maehara said.

RIFTS

The New York Times reported in September, citing unidentified sources, that China had imposed an embargo on rare earths shipments to Japan, in retaliation for Japan’s arrest of a Chinese ship captain after a collision in disputed waters.

On Friday, the Times reported that embargo was lifted, again citing unidentified sources.

Chinese officials have repeatedly denied any unilateral embargo, and trading sources had not independently confirmed that there was one.

The rift between China and Japan is one of several disputes casting a shadow on efforts to boost economic cooperation among countries in a region increasingly seen as the world’s engine of growth.

Global currency troubles are not officially on the agenda but the issue has come up on the sidelines with leaders of the Association of South East Asian Nations (ASEAN) wary about being caught up in a currency war between China and the United States.

China also has decades-old disputes with Brunei, Malaysia, Taiwan, the Philippines and Vietnam over boundaries in the South China Sea, an area key for international shipping and possibly rich in oil and gas.