Japan, South Korea revive economic talks
Resumption of regional bilateral meetings comes as global risks grow
Japan and South Korea held their first finance leaders’ meeting in seven years yesterday and agreed to resume regular dialogue as tensions in the wider region and slowing growth prod them to increase co-operation and mend strained relations.
The resumption of bilateral financial discussions comes ahead of Japanese prime minister Fumio Kishida’s planned visit to South Korea on Sunday and Monday for talks with President Yoon Suk Yeol.
It also came as Asian policymakers, gathering for the annual Asian Development Bank (ADB) meeting this week in the South Korean city of Incheon, discuss regional economic challenges and ways to beef up buffers against various shocks.
“Japan and South Korea are important neighbours that must co-operate to address various challenges surrounding the global economy, as well as the regional and international community,” Japanese finance minister Shunichi Suzuki said at the meeting with his South Korean counterpart, Choo Kyung-ho.
“As for geopolitical challenges, we’re experiencing incidents like North Korea’s nuclear missile development and Russia’s invasion of Ukraine.
“Japan sees these as unacceptable, and something the two countries must address together.”
Choo said the two countries could strengthen private and government partnerships in hitech industries such as semiconductors and batteries.
Japan and South Korea would resume regular finance dialogue, likely to be held annually, at an appropriate time, Suzuki said after the bilateral meeting.
Choo was expected to visit Japan this year for another meeting with Suzuki, South Korea’s finance ministry said.
Relations between the two North Asian US allies have been strained in the past over disputes around Japan’s 19101945 occupation of Korea.
Washington has pressed both countries to resolve these disputes to better counter rising threats from China and North Korea and other regional challenges.
Under Yoon, South Korea has resumed trilateral military drills and agreed to more intelligence sharing on issues like tracking ballistic missile launches from North Korea.
While Japan and South Korea mend strained ties, relations with China are trickier, with Beijing’s increasingly aggressive actions near Taiwan causing tensions that cast a shadow over the finance leaders’ gatherings.
Japanese and South Korean delegates also met Chinese delegates in a separate meeting.
China’s finance minister and central bank head were not present at a trilateral meeting, with their deputies attending instead.
Analysts say the move reflects China’s dissatisfaction over South Korea’s joint statement with the US calling for the need for peace and stability in the Taiwan Strait.
Asia’s economy has been a bright spot in the world, with the International Monetary Fund (IMF) upgrading this year’s growth forecast for the region thanks to China’s postCovid rebound.
But the failures of three US banks have alarmed policymakers about the possibility of market turbulence as a result of aggressive US interest rate rises.
The sale of First Republic Bank’s assets to JPMorgan Chase has left markets anxious about other financial risks, even if the initial response has been reasonably positive.
Building stronger buffers against shocks were expected to be among key topics of debate when finance leaders of the Asean+3 — which comprises the 10-member Association of Southeast Asian Nations (Asean) and Japan, China and South Korea — met yesterday.
Japan, which co-chairs this year’s Asean+3 meeting with Indonesia, hoped to discuss beefing up a network of currency swap lines called the Chiang Mai Initiative Multilateralisation (CMIM).
Specifically, Tokyo was keen to propose a facility that enhanced the use of existing currency swap lines and allowed members to tap funds in emergencies, three sources said.
Indonesian finance minister Sri Mulyani Indrawati, co-chair of the meeting, said the co-operation of member states on the CMIM and other initiatives was vital.