China urges Japan, South Korea and Asean to deepen cooperation amid trade war turbulence

Beijing’s top financial and economic officials want to strengthen regional ties amid US trade war uncertainties

China’s central bank governor and finance minister have called for deeper cooperation with Asean, Japan and South Korea amid rising global volatility and geopolitical headwinds.

Finance Minister Lan Foan said Beijing is willing to work with regional partners to strengthen macro policy coordination, deepen trade and investment ties and safeguard production and supply chain stability, in an address on Sunday at the 28th Association of Southeast Asian Nations + 3 Finance Ministers’ and Central Bank Governors’ Meeting in Milan, Italy.

He emphasised that China seeks to reinforce strategic trust and development integration with neighbouring countries and is committed to open, inclusive and cooperative regional financial partnerships to counter global uncertainty.

“At present, the world economic landscape is undergoing profound changes, globalisation is experiencing a counter-current, unilateralism and protectionism are on the rise with instability and uncertainty clearly growing,” Lan said in a statement posted on the Ministry of Finance website on Monday.

Lan’s remarks come amid escalating global trade tensions following US President Donald Trump’s sweeping “reciprocal tariffs” in April against most of its trade partners. Countries, including Japan and Vietnam, have held talks with the US as they look to negotiate an agreement.

So far, no trade deals have been announced.

People’s Bank of China Governor Pan Gongsheng also attended the meeting, according to a statement published by the central bank on Monday.

Amid an uncertain global environment, Pan said it is important to strengthen the Chiang Mai Initiative (CMI) as well as the region’s financial safety net.

“Introducing a rapid financing facility, funded by non-dollar freely usable currencies such as the renminbi, expands the resources available under the CMI and marks a breakthrough in diversifying the international monetary system in the region,” he said in the statement.

The meeting’s participants agreed to further explore and improve the CMI, based on the IMF framework – a move seen as a step towards institutionalising the initiative and making it more effective. Pan also urged regional economies to stand united in the face of US tariff hikes.

“The meeting reflected a shared desire among Asean, China, Japan and South Korea to preserve the current globalisation framework – namely, a multilateral trading system centred around the WTO,” said Guo Hai, a researcher at the Institute of Public Policy at the South China University of Technology.

“That the meeting avoided any mention of the US or geopolitical tensions shows Asean and the two Northeast Asian powers are not looking to take sides in the China-US rivalry. The regional security landscape in East Asia remains largely unchanged.”

While China and Asean are likely to pursue deeper economic integration, the structure will be different from the past, Guo added.

“Previously, China and Asean were part of a triangular trade model – Asean as a hub for raw materials and components, China for assembly and the US as the final consumer market. Trump’s protectionist agenda has cast doubt on the sustainability of that model going forward.”

In the future, China will need to open its market further to Asean members to partially offset the loss of the US consumer base, as well as work more closely with Japan and South Korea to support ASEAN’s industrialisation, he said.

Lan also chaired the China-Japan-South Korea Finance Ministers’ and Central Bank Governors’ Meetings, as well as the first 10+3 Finance Ministers’ closed-door exchange where he highlighted Beijing’s fiscal policies to effectively balance economic growth with medium- and long-term fiscal sustainability, as well as addressing the challenges of an ageing population.

China has also pledged an additional US$4 million to the AMRO Technical Assistance Trust Fund, an initiative that supports regional capacity-building for macroeconomic surveillance and financial stability.