Li calls for financial cooperation

Premier Li Keqiang and other foreign leaders attending the Boao Forum for Asia go for lunch in Boao, Hainan province, on Thursday. Wu Zhiyi / China Daily

Premier Li Keqiang urged Asian economies on Thursday to enhance economic and financial cooperation and dialogue to ward off potential risks and contribute to world economic recovery.

He proposed in particular to establish an Asian financial cooperation association to "improve markets and prevent financial turmoil".

"Asian countries must have firm confidence and work together ... (to) overcome temporary difficulties," Li said at the opening ceremony of the Boao Forum for Asia Annual Conference.

The export-driven Asian economy has for many years been a major contributor to global economic growth, but many Asian countries have encountered such problems as falling exports, rising debt and currency depreciation. The interest rate hike by the US Federal Reserve in late December and the possibility of additional increases have driven international capital out of Asia, casting a shadow on the region's growth prospects and financial stability.

However, Li said that the growth momentum of Asia remains sound and Asia is still the most dynamic economy in the world, with developing Asia as a whole registering an average growth of 6.5 percent last year and contributing about 44 percent to world growth. Asia also accounts for one-third of the world's total trade.

Asia "is no longer what it used to be. Most (Asian) countries have accumulated rich experience in expanding the real economy and warding off financial risks," he said.

Analysts said that Asia has made headway in efforts to combat potential financial crisis, and global cooperation is also crucial for minimizing the possibility of a crisis in the region.

"Asia has had a multilayered cooperative mechanism in place to help ward off risks," said Gao Haihong, an economist at the Institute of World Economics and Politics of the Chinese Academy of Social Sciences.

For example, some Asian countries have signed currency swap agreements and have large foreign exchange reserves.

"China has played an important role as a 'stabilizer' in the region," she said. "China is also responsible for helping to anchor the regional financial situation, given its close economic links with other Asian economies."

She said she expected Asian financial cooperation to strengthen this year, considering the increasing volatility of the global markets.

Premier Li proposed establishing an Asian financial cooperation association as a non-governmental organization whose aims are to strengthen cooperation among Asian financial institutions and to integrate resources.

"China is willing to cooperate with relevant parties to improve the Asian financial market buildup and jointly prevent another large-scale regional financial turmoil from materializing," he said.

He also urged relevant parties to complete negotiations on the Regional Comprehensive Economic Partnership within the year.

The partnership is a proposed free trade agreement among the 10 members of the Association of Southeast Asian Nations as well as China, Australia, India, Japan, South Korea and New Zealand.

China will also cooperate with other Asian countries on infrastructure and equipment, he said.

Li said the key to future Asian development lies in human resources, which can "unleash potential and creativity" in the region.

Zhu Min, deputy managing director of the International Monetary Fund, said on Wednesday that the Asian financial sector can play a positive role in that respect. "It is a challenge for the financial sector to shift its lending focus from big enterprises to small firms and innovation-oriented companies" to improve labor productivity, he said.

Global policy coordination is also important in offsetting a policy spillover effect, Gao of CASS said.

Zhou Wenzhong, secretary-general of the Boao Forum for Asia, said that strengthened interaction and cooperation between China and the United States serves the interests of Asia.

"If they cannot cooperate, there would be many problems in Asia," he told Chinese-language media.

Zhang Haizhou and Zhang Yue in Boao, Hainan province, contributed to this story.