China, Japan, South Korea sign historic trilateral deal

Leaders of China, Japan and the Republic of Korea  sealed a historic tripartite partnership to tackle the global financial crisis on Saturday in Japan's Fukuoka Prefecture.

In the statement, Chinese premier Wen Jiabao, Japanese prime minister Taro Aso and South Korean president Lee Myung-bak said they gathered here to help lay a solid foundation in promoting their tripartite cooperation.

The statement also said the tripartite meeting in Fukuoka will pave the way for a new era of tripartite partnership which will lead to the peace and sustainable development in the region.

The three leaders said that they expected Asia to play a role as the center of world economic growth to reverse the downward trend of the world economy.

Premier Wen Jiabao said "We (China, Japan and ROK) are important economic players in Asia and the world, and we must strive to respond to the once-in-a-century crisis."

"Politically and economically, we have a very significant presence in the region," Japanese Prime Minister Taro Aso said. "We should have had this kind of a summit sooner."

The three neighbors, which together account for 75 per cent in GDP and trade volume in East Asia and have held trilateral meetings on the sidelines of regional summit meetings related to the Association of Southeast Asian Nations, since 1999.

"We have reached common recognition that the tripartite cooperation will be guided under the principle of openness, transparency, mutual trust, common interest and respect for our diverse cultures, and that it will contribute to advancing wider regional cooperation frameworks such as ASEAN+3, EAS, ARF and APEC in a complementary and mutually reinforcing manner." the statement added.

The three economies have agreed to cooperation in enhancing mutual political trust, increasing trade and economic contacts, expanding social and cultural exchange and strengthening financial cooperation. The trustful relationship between the leaders will lay a sound foundation for future settlement of bilateral issues as well as regional and global ones, the statement added.

In a joint statement, the three leaders said they believed Asia must be a center of growth to counter the sliding world economy. They said they would push domestic demand and infrastructure projects and a regional web of trilateral currency swap deals, while refraining from raising new barriers to investment or trade for a year.

The three leaders also emphaised that efforts need to be made to reduce the negative impacts the current financial turmoil could have on the world economy.

"Asian countries are expected to play a role as the center of world economic growth." the statement said.

The three countries have decided to expand their currency swap deals, Japan and China, both holding huge amounts of foreign currency reserves, have undertaken an important role in efforts to overcome the crisis in Asia and the rest of the world, the statement said.

South Korean President Lee Myung-bak said that the $26.3-billion currency swap agreement between the central banks of China and the ROK is an important step toward tackling the financial crisis at a meeting with Chinese Premier Wen Jiabao, held a night before the summit. This is the first such deal China has signed with a foreign central bank.

The tripartite agreement will provide more liquidity to Republic of Korea to help stabilize its currency. South Korean President Lee Myung-bak said that China by taking concrete measures have exhibited their responsible approach to cope with the financial crisis with its neighbors.

South Korea's central bank announced on Friday a deal with the Bank of Japan to expand a yen-won currency swap facility for anytime use to $20 billion from an existing $3 billion.

Earlier, the Bank of Korea signed an agreement with the People's Bank of China to set up a new yuan-won currency swap facility, on top of an existing emergency $4 billion credit line.

Swaps generally entail one central bank borrowing a currency from another and offering an equivalent amount of its own as collateral.

The Republic of Korea's won declined 32 percent against the dollar this year amid record selling of the Republic of Korea stocks by foreign investors, dwindling its own currency reserves causing fear that without the swap arrangements it could suffer a foreign exchange crisis because of the global financial turmoil.

The three leaders expressed regret over North Korea's uncooperative attitude at the latest round of six-party talks on a nuclear verification protocol, and agreed to cooperate closely to realize North Korea's denuclearization, issued by Cheong Wa Dae, office of Chinese Premier Wen Jiabao.

In a press conference, South Korean President Lee said, "Many countries are disappointed to see the six-party talks have failed to produce any agreement. Although it may be difficult for North Korea to abandon its nuclear programs and stockpiles and it may take time, the issue can surely be solved if we pursue it patiently."

The leaders have decided to hold the Summit in the three countries on a regular basis, with the next such meeting to be held in China next year, the statement added.

The three countries will also organize regular meetings among foreign ministers to establish a system to tackle the financial crisis by exchanging information and ideas on macroeconomic policies of economic ministers, and push for joint initiatives by setting up an online cyber bureau.