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Economy would be key topic at any Japan-China summit: Japan govt source

Tokyo stocks fell 1.28 per cent on Monday, after weak Japanese factory output figures and as uncertainty hangs over the timing of a Federal Reserve rate hike.

[TOKYO] Japan needs details of China's plans for Sept 3 events to mark the anniversary of World War Two before it decides if Prime Minister Shinzo Abe will visit Beijing then for a summit with Chinese President Xi Jinping, a Japanese government source said.

China will hold a military parade to top off events marking the Sept.= 3 anniversary, which its state media call the "Victory of the Chinese people's war against Japanese aggression".

Sino-Japanese ties, embittered by a territorial row, the legacy of Japan's wartime occupation of parts of China and regional rivalry, have thawed slightly since Abe and Xi met at multilateral gatherings in April and last November. "Both sides have the sense they want to have a leaders'meeting to advance Sino-Japanese relations," the source told Reuters on Thursday. "This would be the first real Japan-China summit. We would like to do this, but there are aspects of the ceremony which are not negotiable," he added, without elaborating.

He stressed no decision had been made about any visit, but said Mr Abe was likely to skip the military parade if he did go to Beijing.

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China's foreign ministry on Wednesday denied a report by the Mainichi newspaper that Mr Abe would visit China on Sept. 3 but not attend the parade, saying it had "never heard of" such a visit.

China's reaction to Mr Abe's Aug 14 statement marking the end of World War Two had been "basically restrained", the source added.

In his remarks, Mr Abe upheld previous Japanese governments'apologies over the war, but made no new apology of his own.

Economic matters would be a key theme of any summit, the source said, but a row over disputed islands in the East China Sea and China's growing assertiveness in the South China Sea, where it has disputes with some Southeast Asian nations, would also figure. "There are many economic topics to discuss," he said. "The mutual impact is huge." Commenting on the slump in Japan's gross domestic product in the quarter from April to June, when the economy shrank an annualised 1.6 per cent, the source said the slowing growth in exports to China was worrisome. "The impact of the slowdown in China's economy has clearly emerged," he said, adding Japan also needed to keep an eye on the impact of the blasts at China's Tianjin port.

Japan's export growth also slowed in July. Exports to China, Japan's biggest trading partner, rose 4.2 per cent in July from a year ago, down from June's 5.9 per cent annual increase.

But the government source said any decision on whether to craft economic measures to bolster growth would come only after looking at data for the quarter from July to September.