European and Asian finance ministers met on the Indonesian resort island of Bali yesterday to boost cooperation in trade, investment and finance as the world economy shows scattered signs of recovery.
The annual Asian-Meeting European gathering of officials from the EU, China, Japan and eight other Asian nations are expected to stress closer coordination in macroeconomic policy between their regions, home to about a third of the world's population.
"European countries are entering into an integrated single market, while we have just started to strengthen our bond market. There will be talks on how to synergise these efforts," said Indonesia's chief economics minister, Dorodjatun Kuntjoro-Jakti.
But, as in previous ASEM ministerial forums, new policies of substance are unlikely by the end of the two days of talks, and much of the agenda centers on technical issues, such as pooling ideas on how to keep Asia's fledgling financial markets stable.
The Bali meeting comes less than two weeks after 11 Asia-Pacific nations launched a new US$1 billion Asia Bond Fund, drawn from their huge central bank reserves, to speed development of a regional bond market.
That Thai initiative is seen as a catalyst for Asia to woo back some of its assets invested outside the region, especially in US bonds.
But delegates in Bali said the weekend meeting would only touch lightly on ways to develop the fund.
"The Asian Bond Fund is not central to the meetings," one European delegate told reporters.
Asia has around two-thirds of global foreign exchange reserves but its bond markets are less developed. Many Asian companies still rely on short-term bank loans for funding, raising the risk of volatility if banks cut credit lines.
In Asia's financial crisis of 1997, the banks did just that, and Asian policy makers are now under pressure to find ways to funnel savings directly into Asian investments, bypassing Western financial institutions, to nourish future growth.
"The bond market in Asia is still weak. If we really want to have a stronger financial system in Asia after the crisis, the Asian bond market must be further developed," said Kuntjoro-Jakti.
At last year's ASEM meeting in Copenhagen, leaders agreed to set up a special task force of 10 experts to work on boosting cooperation between the EU and Asia in the areas of trade, investment and finance.
The EU and Asian officials are also trying to find ways to avoid a stalemate at the WTO liberalization talks launched at Doha in Qatar, in the run-up to a ministerial meeting in Cancun, Mexico, in September.
Some states, such as China, are concerned the round will founder on a lack of consensus.
Japanese Finance Minister Masajuro Shiokawa said he would discuss the removal of obstacles to trade, such as regulations, during three-way talks with counterparts from China and South Korea on the sidelines of yesterday's meetings.
But he said he did not plan to press the issue of revaluation of China's yuan currency, a hot topic following complaints from US and Japanese manufacturers that China was keeping the yuan artificially low, in turn hurting their exports.
"I have no plans to bring up the issue of revaluation directly," he said late on Friday.
Beijing has so far denied that it might allow the yuan, also known as the renminbi, to be revalued higher.
The ASEM forum, set up five years ago in the aftermath of the region's financial crisis, will also discuss various options to fight poverty under the theme of a Millennium Development Goal.
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