Yen-Yuan Plan to Cut China & Japan Dollar Dependence

China and Japan
Chinese Premier Wen Jiabao and Prime Minister Yoshihiko Noda 

Japan and China will promote direct trading of the yen and yuan without using dollars and will encourage the development of a market for companies involved in the exchanges, the Japanese government said.

Japan will also apply to buy Chinese bonds next year, allowing the investment of renminbi that leaves China during the transactions, the Japanese government said in a statement after a meeting between Prime Minister Yoshihiko Noda and Chinese Premier Wen Jiabao in Beijing yesterday. Encouraging direct yen- yuan settlement should reduce currency risks and trading costs, the Japanese and Chinese governments said.

More at Business Week. More Central Bank News.
 

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Is China Now The World's Second Largest Economy?



Japan announced Monday morning that its economy contracted at an annualized pace of 1.1% in the fourth quarter of 2010.

This may mean that China has surpassed the Japanese economy in size to become the second-largest economy in the world.

That is assuming, of course, that the official Chinese economic data is trustworthy.

There are some asking the questions, "Is China overstating its true rate of growth?"
 

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