Japan, China In Talks to Settle East China Sea Dispute

TOKYO (Dow Jones Newswires), May 31, 2010

 Japan and China agreed Monday to soon launch formal negotiations toward a treaty over gas field development in the East China Sea, the source of a long-running territorial dispute between Asia's two biggest economies.

In a meeting earlier in the day, Prime Minister Yukio Hatoyama and visiting Chinese Premier Wen Jiabao also agreed they should establish a hotline between the two countries to avert any future tensions.

But the leaders failed to reach a consensus on how to deal with North Korea, which is under growing international criticism for allegedly sinking a South Korean warship.

The international community is closely watching how Hatoyama may prod Wen into joining Japan and other countries in condemning North Korea for the act.

Japan has already tightened restrictions on the North, and Hatoyama on Monday conveyed to his Chinese counterpart Tokyo's support for South Korea's moves to bring the case to the U.N. Security Council. But the Wen has taken a cautious line on the matter, steering clear of committing to specific action.

Meanwhile, Reuters news agency reported that Wen said earlier in the day China must focus on controlling inflation in its economic policy, and that returning the country's international trade to pre-international financial-crisis levels will take time.

Wen also said international sovereign debt risks may not be over, Reuters reported.

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