Asia's Arc of Advantage - icrier

Korea were invited to be part of the ASEM partnership, which indicated the probable emergence
of ASEAN + 3 based regional frameworks. However, it was the Asian Financial Crisis (AFC),
in 1997, which had a profound impact on thinking pertaining to East Asian Regionalism.
The rapid spread of the financial crisis demonstrated to the East Asian countries the scale of
interdependence amongst their ranks and the need for collaborative action. There was a strong
opinion among them that the IMF and the US exacerbated the crisis, misdiagnosing its causes
and offering inappropriate solutions. 20 For instance, IMF conditions such as spending cuts,
tax increases, bank closures and tight monetary policy in return for a loan of $10 billion to
Indonesia resulted in the contraction of the Southeast Asian economy by 13 per cent in 1998. 21
As a consequence, the Asian Financial Crisis generated deep suspicion of global institutions
such as the IMF and the role of the US in East Asia came under greater critical scrutiny.
In this context, there were apprehensions that China would devalue its currency, resulting in
Chinese exports becoming cheaper in international markets, thus prompting further currency
devaluation across East Asia and plunging the region into a deeper financial crisis. 22 Instead,
China refrained from devaluing its currency and instead mobilised its foreign currency reserves
to assist countries in the region, thereby facilitating the stabilisation of regional economies. 23
These actions were appreciated by Southeast Asian countries. It was this dual dynamic –
the demonstration of intense interdependence by the AFC and the failure of international
institutions to respond effectively – that prompted the countries in East Asia to look at ASEAN
+ 3 frameworks even more closely.
It was in December 1997 that the first ASEAN + 3 Summit was held in Kuala Lumpur, Malaysia,
and the areas of APT co-operation have since expanded and deepened over the years to include
food security, energy security, the environment and sustainable development. 24 However, the
core of ASEAN + 3 has been financial co-operation.
On May 06, 2000, the finance ministers of the ASEAN + 3 came together in Chiang Mai, Thailand,
to explore possibilities of greater financial consolidation. The ministers stated their intention
to co-operate on monitoring capital flows, to establish a regional financing arrangement to
supplement existing international facilities, and to establish a network of research and training
institutions. 25 More importantly, they announced the Chiang Mai Initiative:
20 Richard Stubbs, “ASEAN Plus Three: Emerging East Asian Regionalism?” Asian Survey, May/June 2002, Vol.
XLII, No.3.
21 Analysis: Aid Recipients Welcome IMF’s Shift on Austerity,” Reuters, October 14, 2012, available at http://
www.reuters.com/article/2012/10/14/us-imf-aid-admission-idUSBRE89D0GQ20121014.
22 Wayne M. Morrison, “China’s Response to the Global Financial Crisis: Implications for U.S. Economic
Interests,” CRS Report for Congress, ... available at http://congressionalresearch.com/98-220/document.php
?study=CHINAS+RESPONSE+TO+THE+ASIAN+FINANCIAL+CRISIS+IMPLICATIONS+FOR+U.S.+E
CONOMIC+INTERESTS.
23 Ming Xia, “ “China Threat” or a “Peaceful Rise of China”?” The New York Times, available at http://www.
nytimes.com/ref/college/coll-china-politics-007.html.
24 “Overview: ASEAN Plus Three Cooperation,” ASEAN, October 23, 2012, available at http://www.asean.org/
asean/external-relations/asean-3/item/asean-plus-three-cooperation.
25 “The Joint Ministerial Statement of the ASEAN + 3 Finance Ministers Meeting, May 6, 2000, Chiang Mai,
Thailand,” Ministry of Foreign Affairs, Japan, available at http://www.mof.go.jp/english/international_policy/
convention/asean_plus_3/20000506.htm.
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