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  • China and North Asia Economic Relations.

    This is a good intro article to start the thread off.



    Thomson Financial News
    FACTBOX-Japan, South Korea, China: trilateral ties, tensions
    12.11.08, 05:34 AM EST
    pic

    http://www.forbes.com/afxnewslimited...x5808088.html3

    Dec 11 (Reuters) - Japan's Prime Minister Taro Aso, South Korea's President Lee Myung-bak and Chinese Premier Wen Jiabao meet for a summit to plot their responses to the global financial crisis in Fukuoka, southern Japan, on Dec 13.
    Article Controls



    Despite fast-growing economic interdependence, the three major Asian economies have been unable to forge an alliance that reflects their financial strength and strategic importance.

    Here is an overview of their tangled relations.

    * TERRITORIAL SPATS:

    -- JAPAN/CHINA/TAIWAN: On Dec. 8, Japan protested over Chinese ships entering disputed waters near a group of eight East China Sea islets, called Senkaku by Japan, Diaoyu by China, and Tiaoyutai by Taiwan. China's exploration for nearby natural gas has long irked Japan, which says the area lies in its exclusive economic zone and which now controls the islands.

    -- JAPAN/SOUTH KOREA: The two have a long-simmering feud over a set of desolate islands located about the same distance from both countries, called Dokdo in Korean and Takeshima in Japanese. Tempers flared in July when Seoul protested what it saw as a fresh claim from Tokyo to the islands it controls.
    Comment On This Story

    * DIPLOMATIC TIES:
    -- CHINA/JAPAN: Japan's ties with its biggest trading partner, China, have become warmer after years of disputes relating to Japan's invasion and occupation of much of China in the early 20th century.

    -- In May, Chinese President Hu Jintao made a landmark five-day trip to Japan, the first visit by a Chinese leader in a decade.

    -- Friction remains over Japan's bid for a permanent seat on the United Nations Security Council, and Tokyo's misgivings about China's economic clout and military growth.

    -- JAPAN/SOUTH KOREA: Ties between the two states have been plagued for decades by problems stemming from Japan's 1910-1945 colonial rule over the Korean peninsula.

    -- South Korean leaders have often criticised Japan for not being sufficiently contrite for the often-brutal colonisation and abuses such as forcing Korean and other mostly Asian women to work in brothels for Japanese troops during World War Two.

    -- Japan says it has fulfilled all its legal responsibilities for the colonial period and paid proper compensation.

    -- CHINA/SOUTH KOREA: Once tense relations have improved in the 16 years since Seoul severed ties with Taiwan and recognised China. The two were on opposing sides in the 1950-53 Korean War, when China aided communist North Korea and the capitalist South fought with the U.S.

    -- After talks in Seoul in August, their leaders pledged more high-level contact, expanded cooperation, and designated 2010 Visit China Year and 2012 Visit Korea Year.

    * GLOBAL ECONOMIC RANKINGS (2008):

    ------------- WORLD ------------- ASIA --------------------

    CHINA: 4th largest 2nd largest

    JAPAN: 2nd largest largest

    SOUTH KOREA: 13th largest 4th largest

    __________________________________________________ __________

    * SHARE OF GROSS DOMESTIC PRODUCT (GDP) in 2007:

    ---------------- WORLD ----------- ASIA* -------------------

    CHINA: 6 percent 26.2 percent

    JAPAN: 8 percent 39.8 percent

    SOUTH KOREA: 1.8 percent 8.1 percent

    COMBINED TOTAL: 15.8 percent 74.1 percent

    * Asia = Ten ASEAN countries, plus Japan, China, South Korea, Australia, New Zealand and India. Data from Japan's MOFA, 2006.

    ------------------------------------------------------------

    * EXPORTS (2007):

    Combined export totals make up 17 percent of world exports.

    -- Top export destinations:

    -------------- 1st ---- 2nd ------ 3rd -------- 4th ---------

    CHINA: U.S. Hong Kong Japan South Korea

    JAPAN: U.S. China South Korea Taiwan

    SOUTH KOREA: China U.S. Japan Hong Kong

    ---------------------------------------------------------

    * TOP TRADE PARTNERS:

    -------------- 1st ---- 2nd ------ 3rd -------- 4th ---------

    CHINA: U.S. Japan Hong Kong South Korea

    JAPAN: China U.S. South Korea Taiwan

    SOUTH KOREA: China U.S. Japan Saudi Arabia

    -- All data 2007, except Japan data Jan-Oct 2008 from MOF.

    ------------------------------------------------------------

    * IMPACT OF FINANCIAL CRISIS:

    -- On Wednesday, the three countries' central banks pledged to hold annual talks to tackle the financial crisis, with the first meeting to be held in China in 2009.

    CHINA: Abrupt cooling in the economy has government concerned. Slowdowns and closures in export-oriented factories seen as potential cause of social unrest as thousands lose jobs.

    JAPAN: Slid into recession in the July-September quarter, after its second straight quarter of contraction.

    SOUTH KOREA: Concerns that South Korea is among the most vulnerable to the global financial turmoil have hammered the won, which has lost about one-third of its value against the dollar so far this year.

    * FISCAL RESPONSE PACKAGES:

    --------- Amount ----------------------

    CHINA: 4 trillion yuan ($586 bn)

    JAPAN: 7 trillion yen ($75.44 bn)

    SOUTH KOREA: 30 trillion won ($20.9 bn)

    -- For FACTBOX on South Korean fiscal rescue steps see , for regional government rescue plans see

    Source: Reuters

    (Compiled by Gillian Murdoch, additional reporting by Tetsushi Kajimoto and Linda Sieg in Tokyo, Jon Herskovitz and Kim Junghyun in Seoul and Ben Blanchard in Beijing; Editing by Dean Yates) Keywords: JAPAN CHINA KOREA/

    ([email protected], +65 6870 3922, Reuters Messaging [email protected])

    COPYRIGHT

    Copyright Thomson Reuters 2008. All rights reserved.

    The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
    “the misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all” -- Joan Robinson

  • #2
    Pakistan asked for 5 Billion cash from China and got 500 million and 5 billion investment instead.

    ROK gets a 28 billion USD swap line



    South Korea, China Sign 38 Trillion Won Currency Swap (Update1)
    Email | Print | A A A
    http://www.bloomberg.com/apps/news?p...Vmw&refer=home
    By William Sim and Nipa Piboontanasawat

    Dec. 12 (Bloomberg) -- South Korea and China agreed a 38 trillion won ($28 billion) currency-swap arrangement to help ensure financial stability in Asia.

    “Strengthening regional financial cooperation is not only beneficial to regional financial stability and economic development, but also a major contribution to global financial stability,” the People’s Bank of China said in a statement.

    South Korea wants to secure access to funds to prevent a repeat of the 1997 currency crisis that caused a run on the won and required a $57 billion bailout from the International Monetary Fund. The Bank of Korea is scheduled to release another joint statement with the Bank of Japan on expanding their swap arrangement later today.

    “This is a big achievement for South Korea to help stabilize its currency and maintain its external credibility,” said Chun Chong Woo, an economist at Standard Chartered First Bank Korea Ltd. in Seoul. “Still, it won’t have much impact on the markets today because it was already anticipated.”

    Under the arrangement South Korea can get access to 38 trillion won worth of yuan from the People’s Bank of China at any time. Under a previous deal, the Korean central bank could only get as much as $4 billion worth of yuan or U.S. dollars during times of crisis.

    China’s central bank said it would pursue currency swap arrangements with other countries if is necessary to sustain financial stability in “special circumstances.”

    U.S. Agreement

    The Kospi stock index has risen 16 percent since a $30 billion swap line was agreed with the U.S. Federal Reserve on Oct. 30, suggesting that the arrangement reassured investors that South Korea would be able to service its debt. Before then the index had lost almost half its value this year. The won has gained almost 6 percent versus the dollar since the deal.

    South Korea’s foreign-exchange reserves fell for an eighth month to the lowest level in almost four years in November. Fitch Ratings last month cut its outlook for the nation’s credit rating to negative from stable, signaling that shrinking reserves may pose a threat to the economy’s stability.

    Japan may more than double its swap agreement with South Korea to $30 billion from $13 billion, Nikkei English News reported yesterday. Currently, the Bank of Korea can get $10 billion from its Japanese counterpart in the U.S. currency during a crisis and $3 billion in yen any time.

    “Korea has already experienced what it can be like when it runs out of reserves and how bad the downside can be for the economy,” said Robert Subbaraman, chief economist at Nomura International Ltd. in Hong Kong. “Korea has been quite proactive in trying to secure greater cooperation in the region.”

    Summit

    South Korean President Lee Myung Bak meets Japan’s Prime Minister Taro Aso and China’s Premier Wen Jiabao in Fukuoka, Japan, tomorrow to discuss the global financial crisis.

    The central banks of China, South Korea and Japan this week announced an agreement to meet in 2009, starting regular consultations to ensure currency stability in Asia.

    Finance ministers from 13 Asian nations, including South Korea, Japan and China, agreed in May to create a pool of at least $80 billion in foreign-exchange reserves to be tapped to protect their currencies.

    “This cooperation is kind of a regional self-rescue,” said Ding Zhijie, deputy dean of finance at Beijing’s University of International Business and Economics.

    To contact the reporter on this story: Seyoon Kim in Seoul at [email protected]
    “the misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all” -- Joan Robinson

    Comment


    • #3
      China, Japan, SKorea to tackle financial crisis

      By JAE-SOON CHANG

      SEOUL, South Korea (AP) — The global financial turmoil and the standoff over North Korea's nuclear programs will top the agenda when leaders of South Korea, China and Japan meet this weekend, a senior Seoul official said Thursday.

      South Korean President Lee Myung-bak, Chinese Premier Wen Jiabao and Japanese Prime Minister Taro Aso are scheduled to hold a summit in the Japanese city of Fukuoka on Saturday.

      "The three leaders will focus discussions on financial issues," a senior aide to President Lee told reporters. "Financial cooperation among the three countries will contribute to stabilizing the global financial market."

      The official, who spoke on condition of anonymity citing office policy, said the impasse over North Korea's nuclear program will also be a key topic at the upcoming talks.

      China also said the financial crisis will be a major agenda item.

      "Under the current financial crisis, the cooperation among the three countries and the meeting among the leaders of the three countries are of very important significance," Chinese Foreign Ministry spokesman Liu Jianchao said. "We hope the three countries can join hands to meet the financial crisis."

      The three Northeast Asian nations have held summits on the sidelines of broader international meetings but it's the first time they'll be holding an independent three-way summit.

      Besides the main trilateral session, South Korea will also hold bilateral meetings with China and Japan.

      South Korea hopes to use those meetings to conclude agreements with its neighbors that will allow Seoul greater access to the foreign currency reserves of Tokyo and Beijing, the official said.

      Those deals, if reached, will help reduce fears Seoul could suffer a foreign exchange crisis due to the global financial turmoil.

      Associated Press writer Anita Chang in Beijing contributed to this report.
      http://www.google.com/hostednews/ap/...MZYdgD950E6U80
      “the misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all” -- Joan Robinson

      Comment


      • #4
        Gents,

        What is your impression of this statement "The three Northeast Asian nations have held summits on the sidelines of broader international meetings but it's the first time they'll be holding an independent three-way summit."
        “the misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all” -- Joan Robinson

        Comment


        • #5
          Originally posted by xinhui View Post
          Gents,

          What is your impression of this statement "The three Northeast Asian nations have held summits on the sidelines of broader international meetings but it's the first time they'll be holding an independent three-way summit."
          Speaking from an American perspective that is a very poignant statement. South Korea and Japan are under the American sphere of influence, under the American nuclear umbrella, American troops are stationed in those countries, and they are major trading partners of the US.

          The fact that S. Korea and Japan are willing to speak to China without the US...is it a sign of a weakening in standing by the US in the view of these countries' leaders? A signaling of a lack of confidence in the US to deal with these issues (N. Korea, nukes, economy)?

          It could be though that since Japan is angling for the UNSC seat, they could be working China on that issue, by meeting without the US. As for S. Korea maybe the recent anti-American sentiment in S. Korea is having an impact on that government's decision.

          Comment


          • #6
            This is a related article from a couple of months ago:

            Japan & China Seek Stronger Ties, Set Up A Hotline
            The financial system crisis in the United States and Europe is now crossing borders and affecting real economies in other countries.


            Leaders from Japan and China agreed on Friday to set up a hotline to deepen trust and ties between Asia's two biggest economies and vowed to work together to help the global efforts to curb the financial crisis.

            In bilateral meetings ahead of the two-day Asia-Europe Meeting (ASEM) of 27 EU member states and 16 Asian countries, Chinese President Hu Jintao and Premier Wen Jiabao agreed with Japan's outspoken nationalist prime minister that they will promote strategic and mutually beneficial ties.

            "Expanding relations between Japan and China will lead to global stability and prosperity," Japanese Prime Minister Taro Aso said in a speech at a ceremony to celebrate the 30th anniversary of a Japan-China peace and friendship treaty.

            "I think we can have more confidence in the potential power of the Japan-China relationship and cooperation."

            Aso, seen as an outspoken nationalist, and Chinese leaders agreed to set up a hotline between Tokyo and Beijing, where many still harbour resentment over Japan's invasion and occupation of parts of China from 1931 to 1945.

            China replaced the United States as Japan's top trade partner in 2007, with two-way trade totalling $236.6 billion, and the two export powers' efforts could be crucial to steadying the world economy.

            At the bilateral meetings, leaders from the two neighbours agreed to cooperate on strategies to tackle the financial crisis at a planned summit of global leaders to be held in Washington on Nov. 15.

            "The financial system crisis in the United States and Europe is now crossing borders and affecting real economies in other countries," Aso said.

            "We will have a G20 summit meeting in Washington and now we have the ASEM summit meeting with European countries, so we discussed the need for both countries to hold hands and work together," Aso told reporters.

            Aso came into office with a reputation as an outspoken nationalist, especially wary of China's growing military and economic clout. That has raised fears that under him bilateral relations could deteriorate after a period of warming.

            Aso sought to soften his hawkish image and stressed that the two nations were indispensable partners, noting that Japan's trade with China was now 50 times that of 30 years ago.

            The Japanese leader, who took office last month after his predecessor abruptly quit, has also in the past offended Seoul with remarks that appeared to try to whitewash Japan's often brutal 1910-1945 colonisation of the Korean peninsula.

            Relations with South Korea soured in July after Japan said it would write about a longstanding island dispute in school teaching guides, prompting Seoul to recall its ambassador.

            Seoul was reported to have rejected Tokyo's proposal to hold a leaders' summit of Japan, China and South Korea in anger over Japan's renewed territorial claims over the islands.

            But at Friday's bilateral talk, Aso and South Korean President Lee Myung-bak focused on how to overcome the global financial crisis through bilateral and regional cooperation and stayed away from politically sensitive issues like disagreements over history and the disputed islands, officials from both countries said.

            To fight against the worldwide crisis and discuss issues involving North Korea's nuclear programme, Lee and Chinese leaders supported Aso's proposal to hold a trilateral summit meeting in Japan by the end of this year, they added.

            "Japanese Prime Minister Taro Aso invited President Lee Myung-bak to a summit of South Korea, China and Japan to be held in Fukuoka in mid-December," South Korean presidential spokesman Lee Dong-gwan told Korean reporters at a briefing, adding that Lee had accepted the invitation.
            http://www.javno.com/en/world/clanak.php?id=195781

            Comment


            • #7
              China, ROK central banks sign currency-swap agreement

              The central banks of China and the Republic of Korea (ROK) signed an agreement on Friday to expand their currency swap, which involved 180 billion yuan (26.3 billion U.S. dollars), China's central bank said.

              The agreement set an upper transaction limit of 180 billion yuan or 38 trillion Korean won (about 28 billion U.S. dollars), the People's Bank of China (PBOC, central bank) said on its website.

              The PBOC said the three-year agreement could be extended by mutual agreement.

              The swap agreement is intended to provide short-term liquidity support to banking systems in both economies and support bilateral trade, it said.

              The two sides also agreed to discuss the possibility, and the proportion, of changing the swap currencies into forex reserves, it said.

              The PBOC said the swap agreement supplemented an earlier one under the Chiang Mai Initiative, which was signed in that Thai city in May 2000.

              The initiative aimed to set up a network of currency swap agreements among the 10 members of the Association of Southeast Asian Nations and China, Japan and the ROK, which was designed to stabilize currencies in time of financial crises.

              Comment


              • #8
                Hero,

                In the meanwhile......


                From Japan:
                Chinese intrude at Senkakus


                Tuesday, Dec. 9, 2008

                http://search.japantimes.co.jp/cgi-b...0081209a6.html


                NAHA, Okinawa Pref. (Kyodo) Two Chinese survey ships entered Japanese territorial waters on Monday morning in the East China Sea near the Japanese-administered Senkaku islets, which are also claimed by Taiwan and China, the Japan Coast Guard said.

                Chief Cabinet Secretary Takeo Kawamura said Japan has lodged a protest with China against the "very regrettable" intrusion by the two survey ships.

                He said the coast guard urged the Chinese ships to leave.

                The coast guard said a patrol boat confirmed around 8:10 a.m. that the Chinese ships were inside the territorial waters about 6 km southeast of Uotsuri Island.

                The ships were identified as the 1,100-ton Haijian No. 46 and the 1,900-ton Haijian No. 51.

                Vice Defense Minister Kohei Masuda said his ministry had received information about China's intrusion from the coast guard, but the Self-Defense Forces were not taking any specific steps to respond to the intrusion.

                One of the Chinese ships moved out of the area around 5:20 p.m. and the other departed at around 5:30 p.m. after calls by the Japanese patrol boat to leave, officials said.


                From China
                Spokesman: Chinese maritime patrol near Diaoyu Islands irreproachable

                english.chinamil.com.cn 2008-12-09

                  BEIJING, Dec. 8 (Xinhua) -- The patrol of Chinese ships in its territorial waters is irreproachable, said a Foreign Ministry spokesman Monday night.

                  The comment by spokesman Liu Jianchao came in response to a question regarding the reported marine surveillance by Chinese ships in the seas near the Diaoyu Islands on Monday.

                   "The Diaoyu Islands and adjacent islets are Chinese territories since ancient times. The usual cruising of the Chinese ships within Chinese seas is irreproachable," Liu said.
                “the misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all” -- Joan Robinson

                Comment


                • #9
                  My view:


                  Like it or not, Chinese, Korean and Japanese know that they have live with each other in that corner. The current economic crisis illustrates that deep-rooted regional rivalry can set aside to address a common problem. None of the three players fall back to nationalism or protectionism and that is a good sign.

                  Clearly, there are multiple levels (global, regional, local) of response to the current crisis and some of the decision can not and should not wait until Obama takes office. US simply does not have the billions of credit make aviaible to ROK.

                  Also, if the next US administration does (very unlikely) follow thought with the campaign promise of more protectionism, it will have no ammo against three of the largest exporters in the world.
                  “the misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all” -- Joan Robinson

                  Comment


                  • #10
                    I would be very surprised, very surprised if the Obama administration goes with any protectionism. My sense is this will be downplayed a lot by US policy makers and US media. That's three of the US's top seven trading partners, so anything that will stabilize those economies quickly will probably be looked on favorably.

                    You mentioned regional level and that got me thinking about Regional Security Complexes or structures. Not saying that this cooperation will lead to that necessarily, but there is interest in the region for a security regime. If, for whatever reason (new realities, economics, etc.) the US can no longer fill that role...

                    Comment


                    • #11
                      I can not predict the future, but judging from the news headlines release from those three nations (including HK and Taiwan) the move was hail as a great regional breakthrough. Such an important political event (with some economic impact) received no coverages in the West outside of specialized sources such as Bloomberg, Forbes and WSJ. As for mainstream there were short intros from NYT and WaPo that was about it.
                      “the misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all” -- Joan Robinson

                      Comment


                      • #12
                        Asian ministers: uphold free markets in downturn
                        http://www.google.com/hostednews/ap/...WgNDgD96GRFN82
                        By MICHAEL CASEY –

                        BANGKOK (AP) — Asian finance ministers pledged Sunday to uphold free trade and investment in the midst of the global economic slowdown and said they would allocate an additional $40 billion to protect falling currencies.

                        The ministers from 10 Southeast Asian nations as well as China, Japan and South Korea agreed to boost funding for the Chiang Mai Initiative — an arrangement forged after the 1997 Asian financial crisis to address foreign reserve deficits through bilateral currency swaps — from $80 billion to $120 billion.

                        The 10 members of the Association of Southeast Asian Nations will provide 20 percent of funding, with 80 percent from China, Japan and South Korea.

                        The plan is expected to be approved at an ASEAN summit in Hua Hin, Thailand, from Feb. 27 to March 1.

                        "We reaffirm our determination to dedicate ourselves to increasing the free flow of trade and investment, to standing firm against protectionist measures which would worsen the economic downturn," the ministers said in a statement.

                        The commitment to free trade echoed comments made earlier in the day by Thai Prime Minister Abhisit Vejjajiva.

                        "I hope that ASEAN will send a signal that in this economic downturn it will not favor protectionism," Abhisit said. "ASEAN will not survive alone while causing trouble to other countries."

                        In October, ASEAN finance ministers expressed confidence that the group would weather the global downturn, noting its economic fundamentals remained sound even though growth might not match last year's 6.7 percent.

                        But in recent months, many countries have begun to feel the effects of the downturn on their export-driven economies.

                        Thailand reported Thursday that exports posted their steepest fall in 12 years in January as demand for the country's cars, hard drives and electrical goods evaporated amid the global slump.

                        Thailand, Singapore, Malaysia and the Philippines have all announced multibillion-dollar stimulus packages that include a mix of infrastructure projects, cash handouts or tax cuts aimed at creating jobs and boosting consumer demand.

                        ASEAN was founded during the Cold War as an anti-communist political coalition, later evolving into a trade bloc. It consists of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
                        “the misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all” -- Joan Robinson

                        Comment


                        • #13
                          Asia Agrees on $120 Billion Currency Pool Amid Crisis (Update1)
                          Email | Print | A A A

                          By Shamim Adam and Seyoon Kim

                          Feb. 23 (Bloomberg) -- Asian nations will form a $120 billion pool of foreign-exchange reserves that can be used by countries to defend their currencies in an expansion of efforts to battle fallout from the global financial crisis.

                          Finance ministers from Japan, China, South Korea and 10 Southeast Asian nations agreed to the fund at a summit yesterday in Phuket, Thailand. The amount is 50 percent more than was proposed last May, and a broadening of the current arrangement called the Chiang Mai Initiative that allows only bilateral currency swaps. No date was set for completion of the new pool.

                          The fund may help ensure central banks have enough to shield their currencies from speculative attacks such as those that depleted the reserves of Indonesia, Thailand and South Korea during a financial crisis a decade ago. Many Asian currencies have tumbled in the past year, threatening regional stability, as the global recession hits their export-dependent economies.

                          “This fund is not aimed at avoiding a region-wide simultaneous depreciation,” said Sebastien Barbe, a strategist at Calyon in Hong Kong, the investment banking unit of France’s Credit Agricole SA. If “the aim is to avoid a currency crisis if one or two member countries are under extreme pressure, then the fund can be used to avoid a currency crisis,” he said.

                          The South Korean won advanced 0.5 percent to 1,498.85 against the dollar as of 11:22 a.m. in Seoul. Taiwan’s dollar gained 0.4 percent to 34.680 and the Malaysian ringgit climbed 0.8 percent to 3.66.

                          ‘Highest Priorities’

                          A regional currency agreement is vital “in ensuring market confidence in the Asian economies,” Thailand Finance Minister Korn Chatikavanij told reporters yesterday. “It is one of our highest priorities.”

                          Japan, China and South Korea will provide about 80 percent of the currency pool with the 10 Association of Southeast Asian nations contributing the rest, the statement said. How much each country will supply will probably be decided by the next meeting in May, the ministers said yesterday.

                          Thailand, Indonesia, Malaysia, Singapore and the Philippines, the five biggest Southeast Asian nations, will contribute $3.5 billion each to the pool, Malaysia’s state news service Bernama reported, citing Deputy Prime Minister Najib Razak, who attended the meeting.

                          “There’s no question it’s a positive step,” said Richard Yetsenga, Asia currency strategist at HSBC Holdings Plc in Hong Kong. “The key headwinds to this becoming a real influence in the market is related to ironing out the details. It’s taken them 10 years to get this far. It’s unlikely the remaining issues will be resolved quickly.”

                          Bilateral Swaps

                          Under the current arrangement of bilateral currency swaps, 80 percent of borrowings are linked to conditions in the International Monetary Fund’s lending programs. With the new initiative, that may change and more may be tapped without the borrower being subject to such measures, the ministers said.

                          “If the objective is to ensure the region against the significant structural adjustments, they need to move away from the IMF conditionality,” Yetsenga said.

                          Eight of 10 of Asia’s most-traded currencies outside of Japan have fallen against the dollar in the past year, led by a 37 percent tumble in the Korean won and a 24 percent decline in Indonesia’s rupiah, according to Bloomberg data.

                          The currencies are at risk of further losses as wealthier nations curb overseas investment and private investors sell existing stock and bond holdings in emerging markets.

                          Risks to Asia

                          “Capital flows into the region have decreased due to global de-leveraging,” the ministers said yesterday.

                          Large reversals “of capital flows, which have affected the financial markets, could undermine growth prospects,” they said. “This can be a significant downside risk to regional growth, which has already been dragged down by the global economic downturn.”

                          A decade ago, Indonesia, Thailand and South Korea spent much of their foreign reserves attempting to prop up their exchange rates. The three nations were forced to turn to the IMF for more than $100 billion of loans. In return, the governments had to cut spending, raise interest rates and sell state-owned companies.

                          In the years since, Japan, China and South Korea together with the Asean economies have amassed more than $3.6 trillion of foreign-exchange reserves, about half of the global total.

                          “We reaffirm our determination to dedicate ourselves to increasing the free flow of trade and investment, to standing firm against protectionist measures which would worsen the economic downturn and to refrain from raising new barriers,” the Asean ministers said in a statement.

                          Reserves Decline

                          Fallout from the current global slump has led some Asian nations to use their reserves to support their currencies.

                          South Korea is prepared to support the won and add to a bank recapitalization fund should the economic slump worsen, Finance Minister Yoon Jeung Hyun said yesterday in Phuket.

                          Malaysia’s gold and foreign-exchange reserves fell to $91.3 billion on Jan. 30 from $123.7 billion on Aug. 15. Indonesia’s have slumped by $10 billion since last July to $50.9 billion at the end of January.

                          Asian nations are expanding or forging new bilateral currency swap agreements even as they set up the combined reserve pool. Japan and Indonesia on Feb. 21 agreed to boost the size of an existing bilateral agreement to $12 billion from $6 billion. China and Malaysia this month agreed on a three-year 80 billion- yuan ($11.7 billion) currency swap.

                          “As an interim measure, the existing bilateral swap agreement network should play its full role and be strengthened in terms of size and participants if necessary,” the Asian ministers said.

                          To contact the reporters on this story: Shamim Adam in Phuket, Thailand at [email protected]; Seyoon Kim in Phuket, Thailand or [email protected].
                          “the misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all” -- Joan Robinson

                          Comment


                          • #14
                            China, Japan vow to boost global recovery

                            By Miwa Suzuki – 8 hours ago

                            TOKYO (AFP) — Global economic giants Japan and China Sunday pledged to throw their combined weight behind efforts to revive the struggling world economy after talks aimed at boosting trade between the two powers.

                            The world's second and third largest economies also called for a resumption of stalled international talks to free up global trade and said they would launch joint assistance programmes for developing countries for the first time.

                            "On the global economic and financial crisis, both countries agreed to implement what was agreed at the London summit swiftly and in a solid manner in order to realise the global economic recovery as soon as possible," said Japan's delegation leader, Foreign Minister Hirofumi Nakasone.

                            At their London summit in April, the Group of 20 developed and major emerging economies agreed to commit one trillion dollars to the International Monetary Fund and other global bodies to help struggling economies.

                            The G20 also said it would push for greater regulation of the global financial system to tackle the world's deepest economic crisis in decades, which has plunged Japan into recession and dented China's stellar growth.

                            "Both sides underline the need to assume a consistent and responsible attitude to step up regional and international economic and financial cooperation," China's Vice Premier Wang Qishan said at a news conference with Nakasone.

                            They were speaking after the second Japan-China High-Level Economic Dialogue, aimed at boosting trade and investment between the two nations, who are top trade partners but also economic rivals and competitors for resources.

                            Japan, a high-tech and environmental technology leader, and China, the world's most populous country with a vast and cheap labour force, hope to increasingly join their economic forces for mutual benefit, experts have said.

                            "We want to enhance bilateral trade ties further under this grand policy of forming strategic, mutually beneficial relations," said Wang, who was leading the Chinese delegation.

                            Both China and Japan also called for an early conclusion to the Doha Round of trade talks under the World Trade Organisation (WTO) "so that the global economy will return onto a track of sustainable growth," Nakasone said.

                            And they pledged to jointly give development assistance to developing countries, although they provided no details.

                            The Japan Bank for International Cooperation and the Export-Import Bank of China agreed to "cooperate in foreign development aid to give financial support" to third countries, Japan's foreign ministry said.

                            The two nations also tackled the thorny issue of their different views on how to deal with North Korea over its recent nuclear and missile tests.

                            China's Foreign Minister Yang Jiechi reiterated Beijing's call for "an appropriate and balanced" UN Security Council resolution.

                            Beijing, one of the council's five veto-wielding permanent members, has in the past blunted calls led by Washington and Tokyo for strong punishment of the isolated fellow communist country that neighbours China.

                            Tokyo has pushed strongly for tougher sanctions that may include ship cargo inspections, a tighter arms embargo and new financial restrictions.

                            Nakasone told Yang that "China's role as a regional power and a country with close ties with North Korea is great in this issue."

                            China and Japan also addressed the rampant production of knock-off goods in Chinese factories that has hurt Japanese companies, and agreed to launch annual talks on jointly cracking down on copyright and trademark piracy.

                            Japan also reiterated that China should scrap a plan to examine and certify more than a dozen types of IT products, including anti-hacking software, before foreign firms can sell them to China's government.

                            The United States, Japan and other major IT manufacturers fear that China will use the process to learn software trade secrets.

                            Copyright © 2009 AFP. All rights reserved. More »
                            AFP: China, Japan vow to boost global recovery
                            “the misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all” -- Joan Robinson

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                            • #15
                              BEIJING, June 15 (UPI) -- China, Japan and South Korea Sunday agreed to increase cooperative efforts for public awareness on environmental protection.

                              The three countries' environment ministers, who met in Beijing for their 11th Tripartite Environment Ministers Meeting, also discussed the environmental challenges facing their region and the rest of the world, China's state-run Xinhua news agency
                              reported.

                              China's Zhou Shengxian, Japan's Tetsuo Saito and Korea's Lee Maanee also agreed to promote green cities and low-carbon products and to fight air and water pollution, the report said.

                              The tripartite meeting, which was started in 1999, is designed to discuss environmental issues at ministerial level in the three countries and to promote regional environmental cooperation, the report said.
                              “the misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all” -- Joan Robinson

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