Cooperation of Korea, China and Japan to serve as growth engine of global economy: Korean finance minister

Finance ministers and central bank chiefs from Korea, Japan and China gather together for the 23rd Trilateral Finance Ministers and Central Bank Governors' Meeting held in Incheon, Tuesday. Korea's Finance Minister Choo Kyung-ho, third from left, and Bank of Korea (BOK) Governor Rhee Chang-yong, fourth from left, hold hands with their Chinese and Japanese counterparts during the meeting. Yonhap

Three countries to strengthen joint financial safety mechanism

By Anna J. Park

Korea's Finance Minister Choo Kyung-ho emphasized that the cooperative ties between three Northeast Asian countries ― Korea, China and Japan ― will serve as a crucial engine for speedy and sustainable recovery as well as the further growth of the global economy. The finance minister also vowed that Korea will play an active role in cooperative economic relations among the three countries in areas ranging from trade, tourism and culture to policy coordination.

"The three countries account for over 20 percent of the global economy, while they take up nearly 80 percent of the ASEAN+3 regions," Choo said during the 23rd Trilateral Finance Ministers and Central Bank Governors' Meeting held in Incheon, Tuesday. "As the global economy faces an important inflection point, the trilateral cooperation of the three countries, along with the multilateral ties involving the ASEAN, is paramount in the global economy."

This year's trilateral meeting was held on the sidelines of the 56th Annual Meeting of the Board of Governors of the Asian Development Bank (ADB), which kicked off its four-day program on Tuesday in Incheon, Korea's western port city.

Tuesday's trilateral meeting was held as a consultative body prepping for the annual ASEAN+3 Finance Ministers' and Central Bank Governors' Meeting (AFMGM+3), that was also held on Tuesday afternoon. The economic cooperation between ASEAN and the three Northeast Asian countries began in 1997 and has continued since. It is the first in-person meeting between the economic chiefs of the three countries since 2019.

Finance ministers and central bank chiefs from Korea, Japan and China gather together for the 23rd Trilateral Finance Ministers and Central Bank Governors' Meeting held in Incheon, Tuesday. Yonhap

The Ministry of Economy and Finance announced Tuesday that the finance ministers and central bank chiefs from the three Northeast Asian countries agreed that despite closely-knit economic relations among them, trilateral trades in goods and services have somewhat slowed in recent years, and it is necessary to strengthen the cooperation among them.

"We acknowledge that trilateral cooperation among our countries is crucial in ensuring a rapid and sustainable economic recovery from the unprecedented impacts of the pandemic. We recognize the importance of strengthening our economic and trade relations to secure post-pandemic growth, minimize any lasting negative effects and preparing for future shocks," the joint message of the trilateral meeting reads.

"With the resumption of the in-person meeting this year, we will continue working together to further strengthen our regional and trilateral financial cooperation through various channels, including high-level such as Ministers and Governors and Deputies, and the working-level consultative bodies," the joint message went on, vowing to strengthen their trilateral cooperation for the effective economic recovery of the Northeast Asian countries.

The three countries also agreed to further strengthen a joint regional financing mechanism through which countries mutually pledge financial support to countries experiencing financial difficulties.

"We agree the discussions need to be progressed on the base of exploration of other examples of global regional financial safety nets and in a way that enhance the effectiveness of the Chiang Mai Initiative multilateralization (CMIM). We welcome the updated CMIM Operational Guidelines to enable a member to provide CMIM liquidity support in its own domestic currency and other members' currencies under the voluntary and demand-driven principle," the joint statement highlighted.

Launched in 2010, the CMIM refers to a $240 billion multilateral currency swap arrangement among the ASEAN+3 member nations. Next year's installment of the trilateral meeting is slated to be held in Tbilisi, the capital city of Georgia.

Finance ministers and central bank chiefs of Asian countries wave their hands at the 26th ASEAN+3 Finance Ministers and Central Bank Governors' Meeting held in Incheon, Tuesday. Yonhap

At the AFMGM+3, the members issued a joint statement recognizing that financial cooperation among ASEAN+3 countries has played an increasingly essential role in supporting regional economies to address risks and challenges. They noted that the ASEAN+3 economies maintained growth despite the impact of the pandemic, while inflation rates have also been broadly contained relative to other regions.

They recognized that the long-term growth outlook for the region is contingent on how the region manages risks related to possible future pandemics and climate change, including more frequent and severe natural disasters.

They agreed to explore possible financing structures, including through the study of the pros and cons of paid-in capital structure, in order to enhance the effectiveness of the regional safety net.

Korea's Finance Minister Choo Kyung-ho, left, shakes hands with Japanese Finance Minister Shunichi Suzuki during South Korea-Japan finance ministers' bilateral talks held on the sidelines of the 56th annual meeting of the Asian Development Bank (ADB) in Incheon, Tuesday. Korea Times photo by Choi Won-suk

Korea and Japan to bolster bilateral economic relations

Meanwhile, Choo met his Japanese counterpart Shunichi Suzuki in a bilateral meeting on Tuesday. The two finance chiefs' meeting is a follow-up of their previous agreement, when they met during a G20 Finance Ministers and Central Bank Governors (FMCBG) meeting held in mid-April in Washington, D.C.

During Tuesday's meeting, the two finance ministers confirmed once again on the need to bolster the bilateral economic relations, as the two countries' relations are entering into a new phase of deepened cooperation.

"As Korea and Japan not only share universal values of freedom and human rights, but also have free trade and market economy as an essential core of economic activities, the two countries have numerous areas of cooperation at both governmental and private levels," Choo said during the bilateral meeting.

Korea's Finance Minister Choo Kyung-ho speaks during a bilateral meeting with his Japanese counterpart held on the sidelines of the 56th annual meeting of the Asian Development Bank (ADB) in Incheon, Tuesday. Korea Times photo by Choi Won-suk

Choo added that it's encouraging to witness a changed ambience in relations of the two countries, as seen in the increase in the number of flights between the two countries, the resumption of exchanges of industry leaders and the normalization of export controls.

"Hopefully, Japan promptly completes the reinstatement of Korea into Japan's whitelist of preferential trading partners. Also, the resumption and expansion of dialogue channels between the two countries at private and governmental levels need to be accelerated, including exchanges of students and future generational exchanges," the Korean finance minister emphasized, calling on bilateral partnerships in various other key areas, such as global supply chains, climate change as well as state-of-the-art technological advances.

Responding to the Korean minister's message, Japan's finance minister expressed his agreement that Korea is an important neighbor of cooperation, ranging from geopolitical threats to scientific technologies.

"Japan and Korea are important neighbors that should cooperate to jointly address tasks facing the international community and the global economy," Shunichi said. "In particular, it is the Japanese government's position that North Korea's nuclear missiles and Russia's invasion of Ukraine cannot be tolerated Besides the geopolitical threats, the two countries have areas of human exchanges and scientific technological advancement. I completely agree on Minister Choo's messages."