"Japan is famous as a country that places primacy on economic diplomacy in its foreign policy. So is China. The fact that just ahead of his visit to India, Japanese Prime Minister Yoshihiko Noda met with the Chinese leadership in Beijing drives home this reality. During Noda’s visit to Beijing, the two countries announced a landmark agreement facilitating their trade to be conducted through their own currencies rather than the US dollar.
"When the second and third largest economies of the world get together, it alone implies a tectonic shift in the co-relation of forces. The Japan-China deal has aroused worldwide interest.
China and Japan have reportedly set up a working group to work out the details so that Japanese and Chinese companies can convert currencies directly. Japan also agreed to include China’s yuan currency in its portfolio of foreign reserves.
The deal has huge implications for the world financial system and carries profound meaning as regards the directions in which the Japanese and Chinese brains are working about the world of tomorrow. Neither could be oblivious that the deal sends a message of no-confidence about America’s leadership of the world economy. Put simply, the deal becomes part of the growing tendencies toward dethroning the supremacy of the dollar."