Asia, EU leaders united in lack of detail By Antoaneta Bezlova
BEIJING - European and Asian leaders have concluded a two-day meeting in
Beijing at which they discussed the deepening global financial crisis and
demanded reform of international monetary and financial institutions, but
without coming up with much in the way of specific recommendations.
The pledged support for a coordinated response to the crisis, but concrete
changes were seen as dependant on the entry of Asia's emerging economies into
global policy-setting institutions.
The leaders emerged from the Asia-Europe Meeting on Saturday calling for an
"effective and comprehensive reform of the international monetary and financial
systems" through
consultations with "all stakeholders and the relevant international financial
institutions".
Unanswered was the question of what would replace the Bretton Woods system,
particularly the International Monetary Fund and the World Bank, that has
governed international finance since the end of World War II. Nevertheless,
European politicians appraised the meeting as a success in drawing the support
of Asian countries for reshaping the global economic structure.
"The fact that so quickly all Asian leaders agreed on the principles that we
brought to this meeting is a good demonstration of the possibility of reaching
a consensus," European Commission president Jose Manuel Barroso told the media.
French President Nicholas Sarkozy, architect of the plan to overhaul
international capitalism and infuse the financial system with more regulation
and better risk management, called the meeting very "helpful" for Asia and
Europe to tackle the global financial crisis and build up common cause.
"We discussed nearly all of the topics concerned by the two continents,
including the most difficult issues," he said at a press conference at the end
of the meeting. Sarkozy is looking to present his plan at an international
conference on the financial crisis in Washington that US President George W
Bush has scheduled for November 15.
China said it would attend the meeting, but reiterated its stance that keeping
the country's fast-growing economy stable was its biggest contribution to
combating the financial crisis. Noting that the effect of the global financial
meltdown on Chinese banks had been limited, Premier Wen Jiabao said that all
countries, and developed countries in particular, should take "measures to
stabilize the markets and restore public confidence".
"Financial innovation could help develop the economy, but financial supervision
is even more important for the security of the financial system," he said at a
press conference at the weekend.
Editorials in the state-controlled Chinese press have listed some very concrete
demands as a trade-off for China's deeper involvement in the financial rescue
plan. "We are being called to action as responsible stakeholders but we need to
seek our rights," said the 21st Century Economic Herald on Monday.
"We want the US to give up its veto power at the International Monetary Fund
and European countries to give up some more of their voting rights in order to
make room for emerging and developing countries," the editorial said. "And we
want America to lower its protectionist barriers allowing an easier access to
its markets for Chinese and other developing countries' goods."
Chinese academic Lin Yifu, the World Bank's newly appointed chief economist,
predicted Beijing would stick to its cautious approach in dealing with the
global financial crisis.
Speaking at an international forum to mark the 30th anniversary of China's
economic reforms, Lin said China's "prescription" for the financial meltdown
would be to "stimulate domestic demand".
"Relatively speaking, China is a country with scarce capital funds and it is
hardly the time for us to export these funds and pour them into a country
profuse with capital like the US," Lin told the media on Sunday.
More than 40 leaders from Europe and Asia took part in the weekend discussions
in Beijing that focused on the financial crisis. Asian powers discussed the
launching of a regional monetary crisis fund to help countries in the region
cope better with the global financial turmoil.
On Friday, the 10 members of the Association of Southeast Asian Nations (ASEAN)
together with China, Japan and South Korea agreed to an US$80 billion fund of
central bank swap lines, intended to provide emergency liquidity to financially
troubled nations. The scheme, agreed to be formed by mid-2009, is meant to
replace the existing support arrangement of mainly bilateral swaps formed after
the 1997 Asian financial crisis and which is known as the Chiang Mai
initiative. ASEAN groups the Philippines, Brunei, Myanmar, Cambodia, Indonesia,
Laos, Malaysia, Singapore, Thailand and Vietnam.
The plan to create an Asia foreign exchange fund was first agreed on in May
2006, but negotiations stalled over the contributions made by each country.
South Korea, Japan and China had agreed to contribute 80%, or $64 billion, of
the total fund, with ASEAN nations pitching in the remaining $16 billion.
The participating nations have many details to iron out, including how much
South Korea, Japan and China will each contribute, how the fund will operate
and how much money can be provided to members.
But as talks in Beijing proceeded, South Korea appeared battered by the
financial storm and doubts arose over its commitment to the fund. After stock
markets and the currency plunged on Friday, the country's central bank held an
emergency monetary policy meeting on Monday, at which it decided to cut
interest rates by a record 75 basis points. The country faces its biggest
crisis since requiring an IMF bailout 10 years ago. The bank also broadened the
type of bonds it will accept as collateral in money-market operations, giving
lenders access to more funds.
Meanwhile, Philippine President Gloria Macapagal-Arroyo called on China to take
the lead in convincing other rich nations to give more to the fund. "China has
a tradition of or a track record for being a very responsible member of the
global economic order," she was quoted as saying. "While it is premature to say
what China should do, we are confident China will continue to be a responsible
member of the neighborhood."
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