Any escalation in tension between Japan and China over the Senkau Islands dispute could negatively affect the Asian economy as a whole, a senior International Monetary Fund official warned Wednesday.
But IMF Deputy Managing Director Naoyuki Shinohara also said the Washington-based organization is not seriously concerned about the possibility that the political row could amount to a downside risk to the global economy.
"If Japan-China relations deteriorate further, it would certainly affect the regional economy as well as their own economies," Shinohara, a former vice finance minister for international affairs, said in an interview.
But he also said the IMF "assumes that if the situation remains as it is, we will not face such a significant impact," adding that "I don't think at all that we are now in a situation where we see (the bilateral problem) as a global risk."
The governments of Japan and China "are fully capable of carrying out discussions to solve" the problem, said Shinohara, who is in Tokyo for the annual meetings of the IMF and the World Bank, which started Tuesday.