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Although some Southeast Asian markets have recently been jolted by global volatility, deepening financial cooperation between China and the Association of Southeast Asian Nations (ASEAN) could become a mainstay of growth and financial stability, according to economists attending the 10th China-ASEAN expo (CAEXPO).
Speculation of a new round of crises has bloomed since August, with capital outflows and tumbling stock markets in some emerging economies - notably Indonesia - in anticipation of the end of quantitative easing in the United States.
China and ASEAN need various means of cooperation to ensure financial stability, said Chea Chanto, Governor of the National Bank of Cambodia on Wednesday. He was speaking at a financial forum on the sidelines of CAEXPO, and is convinced that both sides need to expand such cooperation.
In the CAEXPO keynote speech on Tuesday, Chinese premier Li Keqiang said that China and ASEAN can cope with various difficulties and challenges, but moreover, by joining hands and helping each other, they can ensure steady growth and financial stability in the region.
Li's remarks were designed to shore up the confidence of Asian countries to defuse financial risks, economists said.
Cao Yuanzheng, chief economist with the Bank of China, also attending the forum on financial cooperation and development, said the recent fluctuations of Asian markets represent a chance for China-ASEAN cooperation to grow, especially in international use of the Chinese yuan, or renminbi.
While regulators of these countries exchange information, financial institutions from both sides should also collaborate in financial markets, financial products and ways of financing, according to Cao.
Since the 2008 financial crisis, China has rolled out measures to support regional economic stability, including setting up the China-ASEAN Investment Cooperation Fund. The overall scale of the "Chiang Mai Initiative" multilateralization agreement has expanded to 240 billion U.S. dollars.
China's central bank has signed bilateral local-currency swap agreements with counterparts in Asia that total 1.4 trillion yuan (about 226 billion U.S. dollars), the central bank's deputy governor Yi Gang announced to the forum.
Premier Li Keqiang on Tuesday called for a strong, multilayered regional financial safety network and substantial implementation of the bilateral local-currency swap agreements.
China also encourages crossborder trade and investment settlements in local currency and will facilitate ASEAN institutions to invest in Chinese bond markets, Li said.
Han Mingzhi, Chair of the board of supervisors at China Merchants Bank, said promoting settlement in local currency would reduce risks from overdependence on third-party currencies, which is believed to have been central to previous Asian financial crises.
Use of renminbi can improve local financial structure and reduce financial risk for ASEAN members, said Cao Yuanzheng, who still seesplenty of room to improve international use of yuan, especially as a foreign reserve currency and in developing Asian bond markets.
So far among ASEAN countries, only Malaysia and the Philippines have brought yuan into their foreign currency reserve systems.
Bank of Communications' chief economist Lian Ping credits ASEAN members with working out better financial supervision and risk prevention, and is pleased with higher levels of transparency in information disclosure.
"The possibility for the 1997 Asian Financial Crisis to be repeated is low," Lian told Xinhua, adding that a stable Chinese economy and world economic recovery will bring stability to ASEAN economies.
"China-ASEAN financial cooperation is perhaps a greater challenge for China, as it requires a vast, stable internal financial market to back upinternational use of the yuan,"Cao Yuanzheng added.
