China and Japan vowed on Friday to forge closer ties, with the two countries united at a “historic turning point” and signing a wide range of deals, including a $US 30 billion monetary swap pact, amid rising trade tensions with Washington. The two sides signed a currency swap agreement of up to $30.29 billion (3.4 trillion yen), valid until 2021. They also reached an agreement for the establishment of a yuan clearing bank. BEIJING, Oct. 26 (Xinhuane) — China`s central bank said Friday it has sent a bilateral currency swap agreement with its equivalent to Japan. The People`s Bank of China, the country`s central bank, and the Bank of Japan on Friday signed an agreement for a bilateral currency swap of 200 billion yuan, or 3.4 trillion yen, one of 12 cooperative documents signed during Japanese Prime Minister Shinzo Abe`s visit to Beijing. The agreements were signed during Japanese Prime Minister Shinzo Abe`s visit to Beijing for the first formal Sino-Japanese summit in seven years, when Asia`s two major economies tried to continue building relations and trust amid trade conflicts with the United States. The two sides will agree on a 10-by-10 increase in the swap cap of about $3 billion in the previous agreement, reflecting the expansion of trade and investment between Japan and China. A currency exchange agreement allows two institutions to exchange payments in one currency for equivalent amounts in the other currency, in order to facilitate bilateral transactions and provide liquidity support to financial markets.
The agreement aims to ensure financial stability for both countries and support economic and financial activity, the Central Bank said on its website. The contract is valid for three years and can be renewed with the agreement of both parties. Ahead of the briefing, China and Japan signed a preparatory agreement for annual plans for discussions, dialogues and exchanges, as well as a pact to strengthen cooperation in the field of innovation. RCEP is a free trade agreement proposed by China with Southeast Asia and various countries on the Pacific periphery, including Japan. The agreement will be reached at a summit between Prime Minister Shinzo Abe, who will visit China from Oct. 25, and Chinese President Xi Jinping on Oct. 26 in Beijing. This is followed by an agreement between the central banks of the two countries.