GREATER, NOIDA INDIA – The Association of Southeast Asian Nations plus Japan, China and South Korea have agreed to enhance the region’s financial cooperation, despite the absence of the Chinese and South Korean finance ministers.
At the so-called ASEAN Plus Three meeting involving East Asia’s three largest economies, the countries agreed Friday in India to elevate the region’s first economic and financial surveillance body to the status of an international organization, with the aim of strengthening the regional financial safety net.
With the decision, the ASEAN+3 Macroeconomic Research Office (AMRO), will be given the same status as the International Monetary Fund and the Asian Development Bank. AMRO was established in April 2011 to oversee the Chiang Mai Initiative Multilateralization currency swap agreement launched in 2010.
Amid heightened political tensions among the three East Asian nations, the Chinese and South Korean finance ministers as well as the governor of the People’s Bank of China skipped the meeting, sending their vice finance ministers to attend instead, according to government officials of the two countries.
The trilateral meeting, held on the sidelines of the ADB’s two-day annual conference starting Saturday in India, would have been the only opportunity for the finance and central bank chiefs of Japan, China and South Korea to meet during the event, after the cancelation of a previous gathering.
A South Korean Finance Ministry official said that Finance Minister Hyun Oh Seok was absent because he was “busy” with domestic issues. Hyun was “disappointed” he was not able to attend the meeting, according to the official.
Chinese Finance Minister Lou Jiwei was not able to join the gathering due to “a domestic meeting,” according to a Chinese government official. China’s vice finance minister, who took Lou’s place, said at a news conference afterward that the absence of the finance minister and central bank chief had nothing to do with diplomatic issues.
But a former senior Japanese Finance Ministry official, who is in India to attend events related to the ADB gathering, said the absence of the Chinese and South Korean finance chiefs from the ASEAN Plus Three meeting was “apparently because of a deterioration” in their countries’ ties with Japan.
China did not send its finance chiefs to the annual meetings of the IMF and the World Bank in Tokyo in October, after Japan infuriated China by effectively nationalizing the Senkaku Islands the month before. The chain is administrated by Tokyo but claimed by Beijing and Taiwan.
The three countries had met almost regularly since 2000 on the margins of the annual ADB meetings, but China, this year’s chair, decided not to hold the gathering, citing a lack of major topics that needed to be discussed.
There has also been bickering, however, over recent visits by Japanese politicians — including Finance Minister and Deputy Prime Minister Taro Aso — to war-related Yasukuni Shrine in Tokyo. The Shinto site honors Class-A war criminals along with the nation’s war dead.
In addition, Japan’s territorial disputes with China and South Korea are souring economic and political ties with its neighbors.
Later, in a first-of-its-kind meeting organized separately from the ASEAN Plus Three framework, the finance ministers and central bank governors of Japan and ASEAN agreed to boost economic ties.
Japan agreed to revive bilateral currency swap agreements with Malaysia, Singapore and Thailand, and to strengthen bilateral agreements with Indonesia and the Philippines, among other regional cooperation measures.
Aso, who will attend the ADB meeting, told a news conference after a series of meetings that ASEAN represents the region Japan regards as most important, given that its members are enjoying robust economic growth.
“ASEAN is the region on which Japan needs to place the biggest importance down the road,” given that Southeast Asia’s economy will grow further in the future, Aso said.
However, China and South Korea also remain important economic partners of Japan, and it is certain that a further deterioration in relations among the three will deal a blow to the Japanese economy and the future development of Asia as a whole.
Meanwhile, ASEAN and Japan, China and South Korea also agreed to remain vigilant about the negative spillover effects on the region stemming from global monetary easing, amid concern that aggressive credit easing by developed countries, including Japan, will hit emerging economies.
The bloc’s member countries are “well aware that continuing global liquidity infusion could potentially induce excessive risk taking and leverage, credit expansions, and asset bubbles,” they said in a joint statement released after the meeting.
Bank of Japan Gov. Haruhiko Kuroda said at the news conference that Japan explained its monetary easing measures are aimed at ending prolonged deflation, and that it “obtained sufficient approval” from each country.