Japan

China is promoting its claim [over the Diaoyu/Senkaku islands] in a fairly aggressive way, and that runs the risk of some kind of clash that escalates out of control. That is not a good situation at all.

Asia is an economic dynamo, and the [Obama] administration very much wants to be in the region. At a time of limited resources, it's difficult to fund the rebalancing [to Asia], so the value of alliances increases.

Certainly there is going to be a lot of talk about currency valuation, and maybe some reference in the [G20] communique [in Moscow], although most of it will be below the surface.

[While quantitative easing by the Bank of Japan] may have an effect on the exchange rate, it is not the same as outright currency intervention. Moreover, the U.S. would be hard pressed to criticize Japan as the [Federal Reserve] has also resorted to quantitative easing to avoid deflationary pressures.

What’s really important here is that, in contrast to [Shinzo Abe's] previous administration, he’s decided not to visit China. The preference is a robust relation with the U.S. That’s a priority, but Southeast Asia is going to be a very important partner given the relationship with China is so rocky.