East Asia's big 3 economies unite in face of global crisis

FUKUOKA, Dec. 13 Kyodo - East Asia's three biggest economies showed a united front Saturday on efforts
to counter the adverse effects of the global financial turmoil, calling for
enhanced ''regional cooperation.''
Japan, China and South Korea, which account for nearly 17 percent of the
world's economic output, stressed the need for strengthening the ''surveillance
mechanism,'' involving other Asian economies, to monitor regional financial
markets.
The world economy is facing ''serious challenges,'' the leaders of the three
countries said in a joint statement on international finance signed at the end
of their one-day meeting in Dazaifu, Fukuoka Prefecture.
They warned of a possible surge of protectionism around the world as a result
of the current global economic crisis while pledging efforts to reach an
''ambitious, balanced and comprehensive conclusion'' to the faltering Doha
round of global trade liberalization talks.
Japanese Prime Minister Taro Aso told reporters that the leaders also agreed on
the need to steadily implement what was agreed during the summit of the Group
of 20 advanced and emerging economies last month in Washington.
In a related move, the central banks of the three economies expanded their
currency swap deals in order to address liquidity problems in South Korea,
which has seen its currency plunge as foreign investors have fled from the
country's financial markets amid the worldwide credit crunch.
The Bank of Japan and the Bank of Korea have agreed to expand their currency
swap deal in a move that enables the BOJ to provide up to $30 billion worth of
funds to the BOK, more than double the earlier agreed amount of $13 billion.
The People's Bank of China separately increased its own swap line with the BOK
and can now provide up to $30 billion worth of funds, up from $4 billion.
The series of moves are aimed at supporting Seoul's attempts to underpin the
won with Tokyo and Beijing providing yen as well as U.S. dollars in exchange
for the South Korean currency.
South Korea, which also concluded a swap deal with the U.S. Federal Reserve in
October, has intervened in the currency market, selling dollars and buying won
by tapping its foreign exchange reserves, which have declined 20 percent from
levels a year ago.
Osamu Takashima, chief market economist at the Bank of Tokyo-Mitsubishi UFJ,
said the expanded swap arrangements could soothe the tension in financial
markets.
''The fall of the won and other emerging currencies is a symbolic development
of the current crisis,'' Takashima said. ''The fact that Japan, China and South
Korea were able to reach an agreement to prevent further depreciation will have
a certain significance.''
On Saturday, Aso, Chinese Premier Wen Jiabao and South Korean President Lee
Myung Bak hailed the decision by the three central banks.
The banks have also decided to hold independent annual meetings starting next
year in an attempt to accelerate their communication and cooperation.
The joint statement reiterated their commitment to work with the 10-member
Association of Southeast Asian Nations and to upgrade the Chiang Mai
Initiative.
The initiative is a network of bilateral swap arrangements that the three
countries and the 10 ASEAN members launched in 2005 to prevent financial
upheaval similar to the 1997-98 Asian currency crisis.
In order to stimulate the ''regional surveillance mechanism,'' ASEAN members
plus the three economic powers have studied establishing a third-party
organization to monitor local economic conditions and financial markets.
The three leaders also called for an early agreement on boosting the capital of
the Asian Development Bank, a Manila-based multilateral organization for
promoting economic growth and cooperation in the region.
The ADB could be helpful in assisting developing economies in Asia affected by
the financial turmoil, especially in the field of infrastructure development
and trade finance, the statement said.
==Kyodo
2008-12-13 21:31:29