Asian nations should pursue greater financial cooperation among themselves to minimize the damage from the U.S. economic woes triggered by the subprime mortgage crisis, experts told a recent symposium in Tokyo.

Some of the participants said Asia needs to prepare for a sustained reduction in its exports to the United States by creating greater demand at home — by diverting more of its resources to invest in the region’s infrastructure building.

Experts from Japan, China, Singapore, Malaysia and India took part in the March 24 symposium organized by Keizai Koho Center under the theme, “Can the dynamism of Asia be sustained?”

Rinji Takeoka, senior general manager of international affairs of the Nikkei business daily who served as moderator of the symposium, said the subprime-triggered U.S. financial turmoil and the looming recession could potentially disrupt the dynamic growth of Asian economies — even though Asia’s dependence on trade with the U.S. has been on the decline.

Keio University professor Fukunari Kimura said that while Asian exports to the U.S. will of course slow down, its impact on the region’s overall growth will be smaller than was believed in the past.

And the mechanism of production networks linking Asia and the U.S. makes mutual trade resilient toward exchange rate fluctuations caused by the subprime woes, he pointed out, although he noted that impacts from the financial sectors, including stock market turbulence, need to be carefully watched.

But Ramgopal Agarwala, a senior adviser to the New Delhi-based Research and Information System for Developing Countries, warned that the current financial turmoil is only part of long-running U.S. macroeconomic mismanagement, which will require concerted action by Asian countries if they want to avoid being hit by a recession as well.

“It is fundamentally a problem of macro-mismanagement” under which the U.S. was “living beyond its means” by running a current account deficit to the tune of $600 billion to $700 billion a year, Agarwala said.

With the dollar’s status as the global reserve currency, the U.S. “has flooded the world with U.S. dollars” and “there is no way that this problem can be solved without a drastic devaluation of the U.S. dollar,” he said. The only question, he added, is whether it would be a soft landing of the dollar or a hard landing.

And this is where Asian countries have to get together and have a policy of “concerted appreciation” of their currencies against the dollar — so that none of the Asian economies will get special benefits over others through a disconcerted rise in some of the currencies, Agarwala said.

Agarwala also said the U.S. financial turmoil would not be resolved unless the country reduces its current account deficit by reducing its net imports, and that Asia needs to “live with a situation of reduced net exports to America.”

What Asia can do, he went on, is to create more regional demand as a substitute for exports to the U.S. market. Asia can learn from the European Union, where trade within the bloc now accounts for 65 percent of its overall trade, he added.

Agarwala said Asia in fact is in a good position to do this by diverting its huge foreign exchange reserves to finance, for example, the region’s lagging infrastructure building.

And this is an idea similar to what Japan advocated a decade ago in response to the 1997 Asian financial crisis — to create an Asian Monetary Fund to use Asian funds to meet the region’s needs, he said. And the proposal for such a regional institution should be revived now because the U.S. financial turmoil “gives an urgency” for some sort of Asian currency unit — another idea that has been floated but has not made much headway over the past decade, he added.

Hank Lim, research director of the Singapore Institute for International Affairs, agreed that the U.S. turmoil “provides an opportunity for Asia to reorient our regional integration . . . to create our own regional domestic market — not only in goods but also in services.”

Despite Asia’s total foreign exchange reserves of about $3 trillion, financial cooperation among economies in the region is “very slow moving,” Lim said.

“We must accelerate our financial cooperation . . . and reorient” Asia’s huge financial resources for the region’s infrastructure building, such as construction of subways in many of the notoriously congested Asian cities as well as in supporting the development of poorer Southeast Asian countries to narrow the region’s development gap, he said.

Such investments will “create tremendous domestic demand” in Asia “but we never do it” unless there is a crisis, Lim said. “So this is an opportunity.”

Peking University professor Zha Daojiong challenged the view that Asia should accept a weaker dollar and turn more to the regional market.

“We are worried about the weakening of the U.S. dollar,” Zha said. China would “do whatever is necessary to support the dollar . . . because of the centrality of the U.S. in the global economy. You don’t find many markets like the U.S.,” he said.

“This is not a time for any country to be jingoistic — Ah! Americans are finally in trouble. We have to be very careful about this,” he added.

Zha said a serious source of concern is that if the weakening of the dollar and the subprime crisis is viewed as a “symptom of the turning point of the U.S. economy and its global status, then we may see more resource-rich countries beginning to price their commodities in other currencies.” That, he added, will mean an almost fatal blow to the dollar as a global currency.

Mahani Zainal Abidin, director general of the Institute of Strategic and International Studies in Malaysia, said it would not be plausible for Asia to divert its foreign currency reserves for more investments at home because much of its reserves are “locked” in the U.S. Treasury.

Efforts to cash in the reserves and divert the funds to Asia would “make the situation worse,” she warned.

But Agarwala and Lim said Asia needs only to use just a small portion of its $3 trillion reserves and that alone would give a tremendous impetus for capital investments for infrastructure building in Asia.