By Seyoon Kim and Takashi Hirokawa
Dec. 13 (Bloomberg) -- South Korea, Japan and China agreed to set up regular meetings to consult on issues facing the regional economy and work more closely to help counter challenges stemming from the global financial turmoil.
Strengthened cooperation was necessary ``to cope with the situation, in an effective manner, where the world economy and the financial markets are facing serious challenges,'' South Korean President Lee Myung Bak, Japan's Prime Minister Taro Aso and China's Premier Wen Jiabao said in a joint statement. The leaders met today in Fukuoka, Japan.
The summit comes a day after South Korea agreed on bilateral currency swap accords with Japan and China, the world's biggest holders of foreign reserves, in an effort to ensure financial stability in Asia. South Korea and Japan will increase an existing won-yen arrangement to $20 billion while China and South Korea agreed on an accord worth 38 trillion won ($28 billion).
``Asian countries are expected to play a role as the center of world economic growth in order to reverse the downward trend of the world economy and return it to the path of sustainable growth,'' the leaders said in the statement provided by the South Korean presidential office. ``Our economies are dynamic, resilient and closely interlinked.''
Funds Access
South Korea's Lee pursued the swap arrangements to secure access to funds and prevent a repeat of the 1997 currency crisis that caused the won to plunge and required a $57 billion bailout from the International Monetary Fund. The won rose 7.5 percent against the dollar this week, completing the best weekly gain since the end of October, partly in anticipation of yesterday's announcements.
``It is great that the three nations can form a common basis for discussing many issues in East Asia,'' said Toshimitsu Shigemura, a professor at Waseda University in Tokyo. ``This is undoubtedly a historical step.''
South Korea, Japan and China today agreed to facilitate trade and investment in the region and ``confirmed the significance of measures that will reinforce growth and expand domestic demand,'' the statement said.
The countries will ``refrain from raising new barriers to investment or to trade in goods and services, from imposing new export restrictions,'' it said. The three nations account for 74 percent of East Asia's gross domestic product and two-thirds of regional trade volume, according to the Japanese foreign ministry.
Accelerate Plan
The leaders said they will work with the members of the Association of Southeast Asian Nations to speed up a plan agreed earlier this year that extends the so-called Chiang Mai Initiative, a deal allowing countries to lend each other money at favorable terms if help is needed to support exchange rates.
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.
The three countries called for a capital increase from the Asian Development Bank to help support developing countries.
``The Asian Development Bank would play an important role in assisting developing countries in the Asian region affected by the financial turmoil, in particular for infrastructure development and trade finance,'' the statement said.
The leaders reiterated a commitment to strengthen monitoring of the regional economy and financial markets, the statement said.
China wants contributions to the $80 billion fund to be made in accordance with the size of each country's foreign-exchange reserves while Japan wants to use the value of gross domestic product as a measure, South Korea said earlier this year. The remaining 20 percent of the fund will be provided by the 10 members of ASEAN.
North Korea
The three nations called for joint efforts to resolve the North Korean nuclear issue. The latest round of negotiations with North Korea and involving South Korea, China, Japan, Russia and the U.S., ended earlier this week after a fourth day of discussions in Beijing.
``The three countries will make concerted efforts with other relevant parties to forward the process of the six-party talks,'' the statement said.
South Korea, Japan and China will hold the trilateral summit on a regular basis and will meet in China in 2009. The nations will also share information on natural disasters and develop ways to ``reduce vulnerability'' and minimize the damages, they said.
Aso told Wen the intrusion of two Chinese survey ships into waters near disputed islands in the East China Sea was regrettable and urged Beijing not to let it happen again so as not to damage Sino-Japanese ties. Wen reiterated that the territory belonged to China and the matter should be resolved through dialogue.
To contact the reporters on this story: Seyoon Kim in Fukuoka, Japan or Skim7@bloomberg.net; Takashi Hirokawa in Fukuoka, Japan or thirokawa@bloomberg.net
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