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Asian Economic Powers Discuss Slumping World Economy

  • Katie Hamann

The leaders of Asia's largest economies have met independently to discuss options for a coordinated regional response to the worsening global economic crisis. The leaders of China, Japan and South Korea spent the day discussing their economies and a range of issues including North Korea's bid for nuclear weapons and climate change.

In the wintery Japanese city of Fukuoka there was a thawing of relations between former foes China, South Korea and Japan.

Meeting independently for the first time, China's Premier Wen Jiabao, Japanese Prime Minister Taro Aso and South Korean President Lee Myung-bak, whom together manage about 75 percent of Asia's economy, explored ways of supporting each other and the broader Asian community amid the deepening global economic crisis.

Each brought their own tale of economic woe: Host nation Japan is already in recession; South Korea's currency has shed a third of its value in recent months; and, China's exports have fallen for the first time in seven years.

The Chinese premier says the current financial crisis continues to spread, having a major impact by the day on the world economy. The three nations are important economic players in Asia, as well as for the world. Thus together, they should try to respond to this once-in-a-century crisis, he says.

Options discussed at the summit include the rapid establishment of an $80 billion, Asia-wide fund to avert regional financial crises, replacing the Chiang Mai Initiative of currency swaps agreed to in 2000 and a cash infusion for the Asian Development Bank to assist with ongoing development projects in the region.

South Korea in particular is seeking to tap China and Japan's foreign currency reserves to stabilize its currency, the won. It hopes to finalize increased currency swap arrangements with Tokyo and Beijing to the value of $30 billion each.

The trio also pledged not to create new trade barriers over the next 12 months and to improve domestic demand.

Japan's prime minister says there is an ever increasing importance in regional cooperation in regards to the financial crisis. Between Korea and Japan, and Korea and China, there will be increasing currency swaps. This is extremely meaningful, he says, and also has translated cooperation into action."

The discussions spanned several topics including the establishment of a tri-lateral free trade agreement, negotiations with North Korea over its nuclear weapons program, aid commitments to Africa and climate change.

The countries have agreed to continue the meetings with another planned in China next year.

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