Contributors

 

Introduction and Overview / Lee-Jay Cho

Remarks from Host Institution, Cooperating Host Institution and Country Representatives
Welcoming Remarks from Host Institution / Dong Sung Cho
Welcoming Remarks from Cooperating Host Institution / Ganbold Baasanjav
Country Representative Remarks: Republic of Korea / Kwan-Young Park
Country Representative Remarks: China / Fan Xiaoyun
Country Representative Remarks: United States / Stephen Cowper
Country Representative Remarks: Japan / Yasuo Tanabe
Country Representative Remarks: Russia / Pavel Minakir

Country Representative Remarks: Mongolia / Gankhuyag Sodnom

Contents

Part I. Building a Northeast Asia Economic Community and Its Extended Regions
The Asian Financial Cooperation Association (AFCA) / Wang Guoping
Northeast Asia Economic Community Formation and Russia’s Input / Sergei Sevastianov

Part II. Cross-border Infrastructure and Special Economic Zones in Northeast Asia
Talking to North Korea / Glyn Ford
The North Korean Economy and Special Economic Zones / Anthony Michell

Part III. Financial Cooperation in Northeast Asia
Financial Cooperation in Northeast Asia / Yutaka Funada
Should a Northeast Asia Bank for Cooperation and Development Include Financing for the Arctic? / Mead Treadwell
Some Considerations in Establishing the NEABCD / Jai-Min Lee
Understanding the World, Understanding the Region, and Understanding Financial Cooperation / Fan Xiaoyun

Part IV. Energy and Environment in Northeast Asia
Comments on Energy Technology and Policy Trajectories / Terry Surles
State of Renewable Energy and Planning of Cross-Border Transmission in Northeast Asia / Yoshiki Iinuma
Northeast Asia Power Interconnection and Cooperation / Sung Eun Kim
Improving Grid and Community Resiliency Using Advanced Microgrids with Distributed Generation / Mike Hightower
The ‘Carbon Free Island’ Plan / Hesub Rho

Part V. Tourism Cooperation in Northeast Asia
Integrated Resorts Overview: Summary of Presentations by Khalil Philander and Ray Cho / Ray Cho
Medical and Cultural Tourism Overview: Summary of Presentations by Ki-Eun Jung and Zhu Jipeng / Ray Cho
Efforts to Establish an International Ferry Service for Northeast Asia Tourism Development / Ikuo Mitsuhashi
 

   The Northeast Asia Economic Forum (NEAEF) is a regional nongovernmental organization created in 1991 to sponsor and facilitate research, networking, and dialogue relevant to the economic and social development of Northeast Asia. NEAEF is also committed to promoting understanding and relations among the peoples of Northeast Asia, North America, and Europe.
   NEAEF’s main objective is to conduct research and conference activities aimed at functional economic cooperation such as cross-border energy, transportation and logistics infrastructure development, and capital mobilization. NEAEF holds annual conferences, workshops, and seminars for planning, facilitating, coordinating, and implementing international and interdisciplinary solutions to common policy problems. It is the only nongovernmental regional organization in which all the nations of Northeast Asia and the United States are consistent and active participants.
   Over the years, NEAEF has been promoting regional economic cooperation and integration in Northeast Asia aimed at building a Northeast Asia Economic Community. Despite some interruptions, there has been significant progress among the countries in the region except for North Korea (DPRK), which has been the critical gap in an otherwise productive network of dynamic regional economic growth.
   After alarming political tensions resulting from a series of nuclear and missiles tests by North Korea, a dramatic change took place last year in the historic summit between US President Donald Trump and North Korean Leader Kim Jong-un, providing the Northeast Asia region with both challenges and opportunities for minimizing the risk of military confrontation and war. This year, however, the prospect for rapid progress in the de-nuclearization of DPRK has considerably slowed due to subsequent summits and meetings which were not so successful.
   In this context, nevertheless, NEAEF continued its effort began in 1991, toward peace and economic cooperation in Northeast Asia by implementing conference and meeting activities in 2019. These activities are aimed at regional economic integration and thus prepare a meaningful basis and foundation for a potential next step in realizing the goal of building a Northeast Asia Economic Community.
   As in previous years, NEAEF is continuing to fulfill the need for timely and forward-looking research and meetings by focusing on  critical issues, such as 1) discussion and emphasis on connectivity in cross-border infrastructure developments involving North Korea as an integral part of a broader regional economic community in Northeast Asia, and 2) establishment of the proposed Northeast Asia Bank for Cooperation and Development (NEABCD). NEAEF has over the years developed a more cohesive basis for a strong network for functional economic cooperation through regular discussions and consultations among stakeholder country experts.
   For the year 2019, the NEAEF, in collaboration with KIEP, focused on the following topics:
   ● Building a Northeast Asia Economic Community and Its Extended Regions
   ● Cross-border Infrastructure and Special Economic Zones in Northeast Asia
   ● Energy and Environment in Northeast Asia
   ● Tourism Cooperation in Northeast Asia
   ● Financial Cooperation and the proposed development bank for  Northeast Asia
   Annual Conference and Meeting Activities:The Planning Meeting for Regional Cooperation and Strategies for a Northeast Asia Economic Community
   The meeting was held during 21-23 April 2019 in Honolulu, Hawaii, and was organized in collaboration with KIEP and the University of Hawai‘i College of Social Sciences. The plan for major meeting activities was reviewed and discussed: 1. Ad-Hoc Group Meeting on Financial Cooperation in Northeast Asia Stake Holder Countries of China, Japan, and Korea on June 14th, 2019, in Osaka, Japan; 2. The 28th Annual Northeast Asia Economic Forum; and 3. Young Leaders’ Training Program (YLP).
   At the planning meeting, participants agreed that the conference in 2019 will focus on strengthening  functional economic cooperation among the principal stakeholder countries of China, Japan and Korea, and will cover broad as well as specific, topics such as cross-border infrastructure and development and trade, a regional financial institution in Northeast Asia, aimed at a future Northeast Asia Economic Community. The topics will include:
   1. Discussion of relevant issues that will provide the basic foundation for a future Northeast Asian Economic Community
   2. Examination of current issues in functional economic cooperation in the Northeast Asian region by the countries of Northeast Asia and particularly, the stakeholder countries, China, Japan and Korea, in the context of future financial cooperation through the proposed Northeast Asia Development Bank (NEABCD)
   3. Providing wider perspectives from North America, Russia and Mongolia on the Korean Peninsula for future economic cooperation through a regional financial mechanism
   NEAEF, with support from the Freeman Foundation, has been conducting its annual Young Leaders Training and Research Program in Regional Cooperation and Development since 2006. NEAEF is planning to conduct its 14th Young Leaders Program (YLP) from July 28 to August 10, 2019 in collaboration with UNESCAP/NEA and Incheon National University.
   The Ad Hoc Group Meeting on Financial Cooperation in Northeast Asia & Pre-G20 Planning Meeting on Establishing a Northeast Asia Bank for Cooperation and Development: Summary
   1. Update on Current Situation in Japan
   Maeda Tadashi explained that the independent study group led by Tsuyoshi Yamaguchi and other key experts on the Korean peninsula consolidated their works into a proposal and summited it to Yoshihide Suga, the chief cabinet secretary of Japan. Mr. Maeda discussed the building block approach for economic cooperation in Northeast Asia and added that the blocks should be put together by the hands of the leaders of the region. Japan has changed its skeptical posture to one prepared for financial cooperation in Northeast Asia.
   Referring to the “America First” slogan and Brexit, he observed that this trend toward fragmentation of the world will lead to the US and UK losing influence, but it will make the discussion on integration in Northeast Asia more meaningful. He also described the Northeast Asia region as a missing link in terms of economic cooperation. North Korea is the major concern in the region and the Japanese government’s position has been that solving three things—denuclearization, the abduction issue, and missiles—must come first in order to normalize diplomatic relations. In this context, Mr. Maeda said that the discussion on financial cooperation in Northeast Asia and establishment of the NEABCD would be useful to prepare an institutional framework for the region, and eventually for North Korea. He concluded that this Osaka meeting could contribute to exploring ways to improve the serious deadlock between Japan and South Korea.
   2. Chinese Perspective
   Fan Xiaoyun, member of the National Committee of the Chinese People’s Political Consultative Conference and professor & associate dean of Nankai University, briefly explained the continuous efforts of Nankai University in researching financial cooperation in Northeast Asia and emphasized that cooperation is the best way to overcome the challenges that the region is facing now. Like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the “Belt and Road” initiative, cooperation is the necessary path for economic development in the long run, especially for the Northeast Asian region because of complicated geopolitical matters. The region needs the NEABCD as a platform for regional cooperation and economic integration through the support of cross-border infrastructure projects. For cooperation within the region, she suggested four things: 1. the establishment of a cooperation mechanism for local governments of China, Japan, and Korea; 2. the establishment of a joint education and research base; 3. the initiation of an official communication mechanism; and 4. further financial cooperation beyond the NEABCD.
   Ming Liu, associate professor of Nankai University, added further information on China’s situation regarding the establishment of the NEABCD. As a channel to solve the trade conflict between China and the US, China wants to reinforce the trade relationship with Japan and Korea. Referring to the words of Mr. Zhou Xiaochuan, a former president of the Central Bank of China, China is making an effort to increase governance transparency and reduce trade subsidies. He mentioned that we should keep an optimistic view on Northeast Asia’s future. Moreover, the NEABCD and Asian Infrastructure Investment Bank (AIIB) could coexist and enhance communication between the governments of China, Japan, and Korea is necessary. Regarding the North Korea issue, he noted that interests could be united under the same channel: infrastructure.
   3. US Perspective
   Mead Treadwell, former lieutenant governor of the State of Alaska, has been working with the Arctic nations, including Japan, Korea, China, and Singapore regarding the Arctic Circle based on the argument that the arctic can do nothing without these partner countries. He explained the potential roles of the Arctic region: feed the world, fuel the world, provision the world, protect the world, connect the world, inspire the world, and the fact that these activities are directly linked to the markets in Asia. While the Arctic is deficient in infrastructure, traditional development banking is less likely because most Arctic nations are typically donor nations. As an alternative, he suggested cooperative financing mechanisms on global infrastructure, energy, and mineral projects, and gave three illustrative examples of cooperative financing mechanisms: Cooperative Arctic Seaways, LNG export from the Arctic, and Rail connection between Alaska and Canada. The development of infrastructure in the Arctic area is directly tied to Northeast Asia and there has been effort to make sure that Asia is included in the Arctic Circle by encouraging the study group in the Japanese Diet and actively supporting cooperation in research. He concluded that it would be difficult to discuss the idea of developing a new regional bank for cooperation without understanding the Arctic.
   4. Korean Perspective
   Jae-Hyung Hong, the former deputy prime minister of the Republic of Korea, emphasized that it is time for Northeast Asian countries to make every effort to prevent current turbulence in the region and there are two key issues that are heightening the tension within Northeast Asia: the US-China trade war and no improvement in North Korea’s denuclearization. The G20 summit in Osaka will be important to ease current tensions and must adopt a declaration of maintaining free trade while avoiding self-defeating protectionism. Mr. Hong reiterated the importance of creating the NEABCD and suggested that member countries should work together to prepare for economic aid for North Korea to ease tensions and eventually facilitate North Korea’s economic normalization.
   Jai-Min Lee, professor of Korea Maritime University and the former vice president of the Korea Export-Import Bank, pointed out that it became more difficult to put the NEADB issue on the government negotiation table between South Korea, Japan, and China because of the unfavorable political environment around the region. However, two suggestions were made as the region should keep preparing for the establishment of the NEADB with the expectation that the NEA situation will improve. The first suggestion was to initiate multinational research on the NEADB framework, and the second was to launch a financial cooperation council between the national banks: JBIC of Japan and Exim banks of Korea and China, based on past experience of cooperation between the three banks.
   5. European Perspective
   Glyn Ford, the director of Track2Asia, explained the current political situation and the role of the European Union. He insisted that it is obvious that things have been changed since the Hanoi summit and the only way to proceed is for both the United States and North Korea to build a multilateral framework within which they cooperate, referring to the Joint Comprehensive Plan of Action (JCPOA), the Iran deal, and the infrastructure program for North Korea. He also mentioned that the EU showed a willingness to engage regarding the North Korea issue in terms of providing technical expertise and investment; reference was made to the speech at the Shangri-La Dialogue by Federica Mogherini, high representative of the Union for foreign affairs and security policy.
   In the panel discussion, Tae Soo Kang, senior research fellow at KIEP and the former deputy governor of the Bank of Korea, shared his thoughts on the establishment of NEABCD, on differences between NEABCD and the existing development banks with respect North Korea’s access, and how the NEADB might be one way to approach the North Korea problem.
   Maeda Tadashi pointed out that this issue of NEABCD has arisen because of the shortcomings of the existing Asian Development Bank (ADB) in terms of dealing with the problems that Northeast Asia is facing. He also outlined his idea on the NEABCD dealing with cross-border infrastructure projects like the Greater Tumen Initiative (GTI). Regarding the concept of NEABCD, it was proposed that not only central governments, but also provincial, municipal governments should be part of it in order to solve the problem of income gap between metropolitan and local areas within one country. Moreover, the starting point for the building block approach is cooperation between China and Japan, as this bilateral relationship is improving.
   Ming Liu explained that a new type of development bank will benefit not only developing countries, but also developed countries like Japan and Korea.
   Mead Treadwell recommended that the Northeast Asia area be described as a significant strategic opportunity, similar to what Alaska has done to convince global investors that the Arctic should be viewed as an emerging market with better than average returns. He emphasized the need to provide a better macroeconomic snapshot. He also mentioned that North Korea is an obvious special case, but that we should proceed as if it is not the lynchpin.
   The 28th Annual Conference of the Northeast Asia Economic Forum
   The 28th Annual Conference of the Northeast Asia Economic Forum (NEAEF) was held in Incheon, Republic of Korea during August 7-10, 2019. It was hosted by Incheon National University, in cooperation with University of Hawaii College of Social Sciences, UN ESCAP-NEA, and others. Leaders and experts from China, Japan, Mongolia, Russia, the Republic of Korea, the United States, Canada, and the European Union gathered to advance the NEAEF mission of promoting economic cooperation and peace in Northeast Asia. The 2019 annual conference addressed the increased importance of continuing dialogue and cooperation in the region in light of additional indications of interest in North Korea and new infrastructure developments that carry the opportunity for supporting the integration and development of Northeast Asia, the significant role of financial cooperation in terms of a regional multilateral development bank, tourism cooperation, and energy and the environment. The wide range of topics highlights the vast potentia   l for cooperation in Northeast Asia and made for this year’s engaging conference.
   The conference was officially opened by Lee-Jay Cho, Chairman of the NEAEF, who warmly welcomed the distinguished guests and participants and thanked the host institution, Incheon National University, and NEAEF’s partner organizations for making the conference possible. He extended special appreciation to UN ESCAP-ENEA for hosting and providing the venue for the 2019 Young Leaders Program (YLP) at its offices, in most accommodating settings that greatly facilitated the YLP.
   Welcoming remarks were made on behalf of the host institution by Dong-Sung Cho, president of Incheon National University. This was followed by remarks from the cooperating host institution, the UN ESCAP-ENEA made by Ganbold Baasanjav, head of office, UN ESCAP-ENEA and former ambassador of Mongolia to the Republic of Korea. Remarks were then made by the country representatives: Park Kwan-Young, former speaker of the National Assembly, Republic of Korea and president of the National Development Institute; Fan Xiaoyun, member of the National Committee of the Chinese People’s Political Conference, professor and associate dean, School of Finance, Nankai University—on behalf of Wang Shuzu, former vice mayor, Tianjin Municipal Government; Stephen Cowper, former governor of Alaska; Tanabe Yasuo, special representative for external relations, Hitachi, Ltd.; Pavel Minakir, academician and president, Economic Research Institute, Far East Branch, Russia Academy of Sciences; and S. Gankhuyag, ambassador and director, Investment Research Center, Ministry of Foreign Affairs of Mongolia. All speakers were grateful for NEAEF’s essential role in working to meet the common aspirations of the countries of Northeast Asia for regional economic development and expressed enthusiasm for another successful conference.
   In the first session, the main theme of the conference “Building a Northeast Asia Economic Community and Its Extended Regions” was discussed. While acknowledging the difficulties created by recent regional disputes and the China-U.S. trade war, Wang Guoping examined new prospects for regional cooperation and benefits from infrastructure development complementary to the Northeast Asia region begun by the Belt and Road Initiative. Sergei Sevastianov then gave a presentation on developments in the Russian Far East that created prospects for increased transportation capabilities through a Northern Sea Route and continued interest in the creation of bilateral and trilateral energy transportation corridors. Following these presentations, an expert committee held an engaging question-and-answer session among themselves and with distinguished members of the audience. Discussions noted that historical and current tensions in the region could be overcome in the same manner as was done in the European Union, the increased interest on the part of North Korea in the Northeast Asia region, and the important role of a NEABCD to promote transportation links in the countries of Northeast Asia.
   The second session focused on “Cross-border Infrastructure and Special Economic Zones in Northeast Asia.” Glyn Ford and Anthony Michell, both with personal experience in North Korea, commented on the state of affairs in the country. North Korea desires to grow its economy, with a future possibility of cooperation with South Korea. Incremental steps will be needed, through negotiations, to establish trust and a path forward for the regional integration of North Korea. International sanctions will continue to be an impediment and Korea’s denuclearization of the peninsula is a process that will take many years.
   Session three addressed the topic of “Financial Cooperation in Northeast Asia.” An international panel of speakers composed of Yutaka Funada, Mead Treadwell, Jai-Min Lee, Fan Xiaoyun, Jae-Hyung Hong, Liu Lanbiao, and Liu Ming presented a number of promising avenues that are emerging in the region, including, for example, Arctic trade routes, developments in the liquid natural gas industry, and infrastructure projects that would be facilitated by cooperation within the region and bring in the support of other actors such as the United States and the European Union. The speakers discussed the continued importance of the NEABCD to facilitate cooperation and economic development amidst the political conflicts. Suggestions for the project included increased multilateral research and planning between the stake holder countries of China, Japan, and the Republic of Korea. Additionally, private sector involvement could reduce reliance on public institutions, which would help the Bank operate even in times of political turmoil. These suggestions will help the region work towards the goals of free trade and improving political relations. A concurring opinion was that the Bank could look into current methods employed by the World Bank, such as the “cascade strategy,” which seeks to increase private investment and “crowd-in” businesses by making upstream legislative and policy changes to political and financial frameworks in developing regions.
   The fourth session was dedicated to “Energy and Environment in Northeast Asia.” A dynamic panel of speakers—Rho Hesub, Terry Surles, Iinuma Yoshiki, Sung Eun Kim, and Mike Hightower—presented on energy solutions. such as wind energy, solar energy, and the use of micro grids for increased energy security. These avenues have been made possible through multilateral collaboration, advancements in technology, and the promising economic potential of new energy solutions. Because the environment is a shared resource, panelists stressed the importance of cooperation within the region and with other nations, such as the United States. The example of Jeju Island’s environmental sustainability goals was presented, including its “Carbon Free Island” plan, with the goal of being a 100% renewable energy economy with a 75% use of electric cars on the island by 2030, primarily through the use of wind power, managed as a public resource.
   Panelists also discussed increased accessibility to renewable energy across Northeast Asia, with a special focus on wind energy in China and solar energy in Japan. These changes increase security, safety, resiliency, and sustainability, which panelists concurred was more pressing now than ever due to the increased frequency and severity of natural events due to climate change. Finally, the Energy Session discussed meeting supply and demand in a renewable energy market with the incorporation of micro grids in areas subject to natural disaster to provide restoration of needed services to the impacted community. Our future commitments to renewable energy sources within the Northeast Asia region will help assure not only stronger economies, but also a stronger international community.
   Session five, devoted to tourism cooperation in Northeast Asia, examined a wide range of tourism opportunities in Northeast Asia in presentations by Ray Cho, Khalil Philander, Ikuo Mitsuhashi, Ki-Eun Jung, and Zhu Jipeng. The tourism industry in Northeast Asia is anticipated to surpass many existing industries in the near future and will be a key driver for future economic development. Integrated resorts, a new ferry service, and medical tourism were presented as prospective future tourism developments in the region. Three licenses will be awarded for the construction of integrated resorts in Japan. Integrated resorts will include facilities to let visitors experience traditional, cultural, and artistic aspects of Japan. The ferry service is an opportunity for international tourism in Northeast Asia, linking areas in China, Korea, Russia, and Japan. The development of medical tourism provides surgical, traditional, esthetic, and recuperative procedures at the best facilities, with specialists in the area, during an extended and comfortable stay allowing for exploration of the local culture. The culture and tourism industry already plays an important role in Northeast Asia and will continue to grow in this capacity.
   Northeast Asia is a complex region with its fair share of tensions, but this year’s conference embodied a sense of optimism and possibility for cooperation. With continued dedication, clearly greater functional economic cooperation in our region can be realized. The 2019 Conference demonstrated further progress towards the NEAEF goals of promoting understanding and relations among the peoples of Northeast Asia, North America, and Europe.
   Conclusion
   The Northeast Asia Economic Forum has for three decades engaged in the mission and goal of promoting economic cooperation, peace, and prosperity in Northeast Asia with its linkages to North America and Europe. Northeast Asia, endowed with abundant natural and human resources and complemented by capital and technology, is a complex region with a long history of conflicts and tension, and at the same time, also a region of shared cultural affinity.
   This year’s meeting activities, the Annual Conference and ad hoc financial meeting, embodied a sense of long-term optimism and possibility for cooperation for the future, in spite of the constantly shifting political atmosphere in the region. This project, more broadly, has continued to make important contributions in response to changing international situations through timely and necessary research, conferences, meetings, and consultations on regional economic cooperation and integration in Northeast Asia.
   With continued dedication, we believe that greater functional economic cooperation in our region can be realized. To achieve our ultimate goal of developing a Northeast Asia Economic Community, it is absolutely necessary for NEAEF to sustain its effort and momentum and to continue to strive towards the goal of regional development, peace, and prosperity.
   This volume entitled Toward a Northeast Asian Economic Community: Sustaining the Momentum, is the result of our ongoing activities, namely, the ad hoc finance meeting in Osaka, Japan in 2019 and the NEAEF annual conference in Incheon, Republic of Korea, held with a view to developing an economic community for Northeast Asia, one of the most dynamic regions of the world.
   The contents of this volume provide pertinent references and an important basis for further discussion and consideration by government policymakers and researchers in Northeast Asia. The volume also represents an important step in our continuous efforts toward regional economic cooperation and integration aimed at a Northeast Asian Economic Community.

Preface

Contributors

Introduction and Overview
     Lee-Jay Cho

Statements by Country Representatives and Keynote Address

  Country Representative Statement: South Korea
     Kwan-Young Park

  Country Representative Statement: China
     Wang Shuzu

  Country Representative Statement: United States
     George Ariyoshi

  Country Representative Statement: Russia
     Pavel Minakir

  Country Representative Statement: Mongolia
     Ganbold Baasanjav

  Keynote Address
     Nikai Toshihiro

Part I. Building a Northeast Asia Economic Community and Its Extended Regions

  Promoting International Cooperation in Industrial Finance, Propelling High-quality Development of an Asian Economy
     Zhao Xianfeng

  Northeast Asia Economic Community Formation and the Role of the Russian Far East
     Sergei Sevastianov

Part II. Cross-border Infrastructure and Special Economic Zones in Northeast Asia

  Cross-border Infrastructure and Special Economic Zones in Northeast Asia: Politically Holding Hands and Economically Going Underground
     Anthony Michell

  Logistic Connectivity for Northeast Asia
     Inoue Satoshi

  Cross-border Infrastructure in Northeast Asia: Transport and Energy
     Sangmin Nam

Part III. Financial Cooperation in Northeast Asia

  Financial Cooperation in Northeast Asia: Current Trends and Opportunities
     Maeda Tadashi

  A Review of the Asian Infrastructure Investment Bank
     Stanley Katz

  Establishment of the NEADB to Support North Korea’s Economic Development
     Jai-Min Lee

Part IV. Energy and Environment in Northeast Asia

  Trends in Energy Transformation and Policy
     Iinuma Yoshiki

  Perspective from the United States: Update on US Energy Policy and Technology
     Terry Surles

  Perspective from Korea: New Paradigm for Korean Energy Transition and Policy
     Haksik Yoo

  Perspective from Japan: Energy Trends and Policy and Northeast Asia Cooperation
     Tanabe Yasuo

Part V. Tourism Cooperation in Northeast Asia

  Border Tourism in Northeast Asia
     Iwashita Akihiro

  Increasing Tourism through Integrated Resorts—Tourism and Gaming in Northeast Asia
     S. Ray Cho and Brendan Bussmann

  Current Status and Challenges of Japan’s Inbound Tourism Boom: Evidence from Japan’s City-level Data
     Konishi Yoko

  Latest Market Trends: Visitors to Japan
     Tsuboi Yasukiro

Part VI. Panel Discussion on Natural Disaster and Regional Cooperation

  Summary of Panel Discussion on Natural Disaster and Regional Cooperation

Part VII. The Honolulu Ad Hoc Group Meeting on Financial Cooperation in Northeast Asia: Proposal for the Northeast Asia Bank for Cooperation and Development (NEABCD) Revisited

  Review of Current Situation and Recent Developments in Northeast Asia Regional Cooperation Relevant to Financial Cooperation Opening Remarks
     Kwan Yong Park

  Recent Developments and NEABCD
     Stanley Katz

  Perspective from Japan
     Maeda Tadashi

  Perspective from Korea
     Jae Hyung Hong

  Perspective from China
     Liu Ming and Zhang Jianping

  Perspective from the United States
     Mead Treadwell

  Commentary
     Inessa Love

Role and Justification: Why Is the NEABCD Necessary to Meet NEA Financing and Technical Assistance Needs?

  Overview 
     Lee-Jay Cho and Stanley Katz

  A Review of the Ad Hoc Committee on the NEABCD and the Brief on the Establishment of the NEABCD
     Liu Ming

  Recommendations of the Study on the Establishment of the Northeast Asian Development Bank: The Tokyo Foundation Draft
     Chiba Yasuhiro

  Update on Northeast China and Efforts Toward an NEABCD
     Liu Lanbiao

  Strategies, Future Plans, and Activities Establishment of the NEADB to Support North Korea’s Economic Development
     Jai-Min Lee

  Promoting the Northeast Asia Development Bank
     Zou Lixing

  Promoting Financial Cooperation  in Northeast Asia
     Li Zheguang

  The NEADB: Securing the Attention of the United States
     Mead Treadwell

  The NEADB: Considerations and Recommendations for Energy
     Terry Surles

Appendices 

   The risks of political tensions and military confrontation and war in the Northeast Asian region, triggered by North Korea in particular, has been a critical gap in an otherwise productive network of dynamic regional economic growth. However, this year, the milestone summit between US President Donald Trump and North Korean Leader Kim Jong Eun has resulted in a dramatic change on the Korean Peninsular, prompting greater need for the region to strengthen ties and find mutually beneficial ways to handle tasks ahead.
   Toward this end, the KIEP–NEAEF collaborative project seeks to fulfill the need for timely and forward-looking research and meeting activities by focusing on critical issues, such as 1) discussion and emphasis on connectivity in cross border infrastructure developments involving North Korea as an integral part of a broader regional economic community in Northeast Asia, and 2) revisiting the design and establishment of a Northeast Asia Bank for Cooperation and Development (NEABCD) in the context of economic cooperation and integration in the Korean Peninsula.
   This volume in the series of proceedings volumes is titled “Momentum for Building a Northeast Asian Economic Community: Emerging Challenges and Opportunities” and comprises summaries of research presentations and discussions at the planning meeting in Honolulu, at the 27th Annual Conference of the Northeast Asia Economic Forum in Sendai, Japan, and at the Honolulu Ad Hoc Group Meeting on Financial Cooperation in Northeast Asia in 2018. The results of this project represent activities that have been contributing to economic dialogues, interactions, and research on common issues for cross-border future economic cooperation in the region, which involves North Korea.
   KIEP is grateful to Dr. Lee-Jay Cho, Chairman of NEAEF, for his leadership in implementing the project, and to the authors of the presentations, conference participants and discussants who contributed to this volume.
   Drs. Lee-Jay Cho and Hyung-Gon Jeong would like to extend their appreciation to the NEAEF staff for their assistance in the course of the successful implementation of this project, and to Drs. Karla Fallon and Kennon Breazeale for their editorial review and editing of this volume. 

Preface

Contributors

Introduction and Overview
Lee-Jay Cho

Statements by Country Representatives

Part I. China’s Economic Development and Northeast Asia Regional Cooperation in the Context of the Road and Belt Initiative

Part II. Future Tourism Cooperation in Northeast Asia

Part III: Cross-border Infrastructure and Special Economic Zones in Northeast Asia

Part IV: Building a Northeast Asian Economic Community and Its Extended Regions

Part V: Financial Cooperation in Northeast Asia

Part VI: Energy and Environment in Northeast Asia

Appendix: Hong Kong Statement and Agenda 

  This year witnessed political tensions resulting from a series of provocative nuclear and missiles tests in North Korea and from domestic political unrest, culminating in the abrupt leadership change in the Republic of Korea. All these events pose enormous challenges for minimizing the risks of military confrontation and war in the Northeast Asian region. A significant dampening factor on these possibilities is the real progress made in recent decades in economic cooperation and integration within the region, which contributes to reducing military action in the Korean Peninsula. North Korea, however, still remains the critical gap in an otherwise productive network of dynamic regional economic growth.
  For Northeast Asia, there is a continuing and growing need for promoting peaceful economic interactions and research on a common basis for cross border economic cooperation for the future common good, as a means of ameliorating political tensions and frictions in the Korean Peninsula and Northeast Asia. Toward this end, the KIEP–NEAEF collaborative project seeks to fulfill the need for timely and forward-looking research activities by focusing on some of the critical components, such as strengthening economic cooperation with China and exploring future scenarios of North Korea as an integral part of broader regional economic cooperation in the region. This collaborative work on Northeast Asia remains essential in carrying out activities aimed at building a future Northeast Asian economic community on the basis of the strong network the NEAEF has built over the years for functional economic cooperation, through discussions and consultations among stakeholder country experts on issues such as cross border infrastructure development and financial cooperation.
  This volume in the series of proceedings volumes is titled Sustaining the Momentum for Building a Northeast Asian Economic Community and comprises summaries of research presentations and discussions on building a Northeast Asian economic community presented at the planning meeting in Honolulu and at the Annual Conference of the Northeast Asia Economic Forum in Hong Kong, China, in 2017. The results of this project represent activities that have been contributing to efforts toward regional economic cooperation and have been carried out in a spirit of cooperation.
  KIEP is grateful to Dr. Lee-Jay Cho, Chairman of NEAEF, for his leadership in implementing the project, and to the authors of the presentations, conference participants and discussants who contributed to this volume.
  Drs. Lee-Jay Cho and Hyung-Gon Jeong would like to extend their appreciation to the NEAEF staff for their assistance in the course of the successful implementation of this project, and to Drs. Karla Fallon and Kennon Breazeale for their editorial review and editing of this volume. 

Preface

Contributors

Introduction and Overview
Cho Lee-Jay and Lee Chang Jae

Statements by Hosts and Country Representatives

 

Part I. Jilin Province’s Economic Development and Northeast Asia Regional Cooperation in the Context of the Belt and Road Initiative

Part II. Cross-Border Infrastructure and Special Economic Zones in Northeast Asia

Part III. Future Tourism Cooperation in Northeast Asia

Part IV. Building a Northeast Asian Economic Community

Part V. Financial Cooperation in Northeast Asia

Part VI. Energy and Environment in Northeast Asia

Appendix 

The Northeast Asia Economic Forum (NEAEF) is a regional nongovernmental organization created in 1991 to sponsor and facilitate research, networking, and dialogue relevant to the economic and social development of Northeast Asia. The Forum is also committed to promoting understanding and relations among the peoples of Northeast Asia, North America, and Europe.
 NEAEF’s main objective is to conduct research and conference activities aimed at functional economic cooperation such as cross-border energy, transportation and logistics infrastructure development, and capital mobilization. The Forum holds annual conferences, workshops, and seminars for planning, facilitating, coordinating, and implementing international and interdisciplinary solutions to common policy problems. It is the only nongovernmental regional organization in which all the nations of Northeast Asia and the US are consistent and active participants.
 For the year 2016, NEAEF in collaboration with the Korea Institute for International Economic Policy (KIEP), carried out activities aimed at building a Northeast Asian economic community. NEAEF has established the basis of a strong network for functional cooperation, for example, regular discussions among stakeholders on financing cross border infrastructure development. For the year 2016, the goal was to take more concrete steps toward a Northeast Asian economic community including efforts to increase dialogue with North Korea, with a view to future functional cooperation. NEAEF has continued to maintain a cooperative networking approach and exchanges with North Korea regarding the Tumen River Area and North Korean special economic zones.
 This year’s volume titled, Consensus Toward a Northeast Asian Economic Community presents the results of a project implemented in 2016 that includes the planning meeting discussions as well as the presentations and summaries of the 2016 NEAEF Annual Conference in Changchun, China.
 

Contributors

Introduction and Overview

Mark Thoma

Session 1 Trade

China’s Emerging Trade Strategy: Drivers, Influence and Implications for North Pacific Economic Cooperation

Yong Wang

1. Key Drivers of Change in China’s Trade Policy
2. China’s Emerging Trade Policy
3. Why will China Embrace Higher Standard FTAs?
4. Integrate the Belt and Road Initiative and AIIB into China’s Trade Policy
5. Implications for the Global Trade Order and North Pacific Economic Cooperation
References

China’s Belt-Road Initiative and Korea’s Eurasia Initiative

Inkyo Cheong

1. Introduction on Korea’s Eurasia Initiative
2. China’s Belt-Road Initiative
3. Korea’s Nordpolitik and Recent Performance of its Eurasia Initiative
4. Conclusion and Policy Implications

The Trans-Pacific Partnership Agreement High Diplomacy and Low (Domestic) Politics

Claude Barfield

1. Broad Themes and Analytic Frameworks
2. Security/Diplomatic Rationale of Trade Policy
3. The Low Domestic Politics of Trade: Who Wins and Who Loses
4. The Political Problem Areas
5. Concluding Observations

Trade

Comments by Taeho Bark

Strengthening North Pacific Cooperation
Comments by Theresa Greaney

 

Session 2 Macroeconomic Perspectives

Global Economic Problems and Emerging Market Economies’ Macroeconomic Policies

Inchul Kim

1. Introduction 102
2. Global Economic Environment 103
3. Analysis of Global Economic Problems 104
4. Macroeconomic Policies for EMEs 109
5. Conclusion 113

References 114
Economic Conditions in the US and the Uncertain Prospects for Future Economic Growth

Mark Thoma

1. Introduction
2. The Current State of the US Economy
3. Forecast for GDP
4. Risks to Growth
5. Conclusion

References

China’s New Economic Norms

Yijiang Wang

1. Introduction
2. The Slowdown
3. Features of the New Economy
4. Concluding Remarks

The Asian Infrastructure Investment Bank and the Struggle for the East Asian International Order

Ming Wan

1. Introduction
2. The AIIB as an International Financial Institution
3. The AIIB and International Order
4. The AIIB and China
5. Recommendation

Macroeconomic Perspectives for Developed and Emerging Economies

Comments by Michael J. Roberts

1. Introduction
2. Emerging Economies
3. China 200
4. The United States

Macroeconomic Perspectives

Comments by Yoon Je Cho

1. Secular Stagnation
2. China’s Economic Slowdown
3. The Inclusion of RMB in the SDR Basket

Session 3 Finance

Strategies for Currency Convertibility: Korea’s Perspectives

Jang Yung Lee

1. Definition and Accepted Wisdom
2. Benefits and Costs of Convertibility
3. Strategies for Currency Convertibility
4. Countries’ Experiences of Convertibility
5. Conclusion and Policy Suggestions
References

Unconventional Monetary Policy, Spillovers, and Liftoff: Implications for Northeast Asia

Marcus Noland

1. Introduction
2. How We Got Here
3. Spillovers
4. Liftoff
5. Conclusions
References

Exploration of the Prospect of Cooperation between Belt and Road Initiative and TPP in Global Economic Governance

Xiaotong Shan

1. Development Philosophy and Cooperation Approach of Belt and Road Initiative
2. BRI’s Implications for the Global Economy
3. Comparison of Similarities and Differences between the Belt and Road Initiative and TPP
4. Cooperation between the Belt and Road Initiative and TPP for Global Economic Integration
5. Mutual Learning between the Belt and Road Initiative and TPP
6. A Preliminary Study on Cooperation between the Belt and Road Initiative and TPP
7. Conclusion
References

Finance Issues

Comments by Baybars Karacaovali

Session 4 Major Findings and Policy Implications

Monetary Policy Response in Emerging Economies and North Pacific Cooperation

Il Houng Lee

1. Introduction
2. Capital Flows and Impact on Emerging Markets
3. Not Always an Efficient Allocation of Capital Across Borders
4. Synchronization of Interest Rates
5. Unsynchronized Business Cycles
6. Overcoming the Limitations of Monetary Policy
7. Capital Flow Measures
8. Strengthening North Pacific Cooperation

Major Findings and Policy Implications

Comments by Taeho Bark

Conference Program
Program
Participants 

The conference was held on Dec 14-15, 2015 co-organized by the Korea Institute for International Economic Policy (KIEP) and East-West Center (EWC) in Honolulu. Participants from China, Japan, Korea and the United States discussed the economic future of the major North Pacific countries and the importance of economic cooperation among them. Major topics in each session were (1) Trade (2) Macroeconomic Perspectives and (3) Finance. The first topic, "Trade",  related to the China'a trade strategy, China's  Belt-Road Initiative, Korea's Eurasia Initiative, and the Trans-Pacific Partnership Agreement (TPP). The second topic, "Macroeconomic Perspectives", aimed to tackle global or regional economic problems through the understanding of the macreconomic  policies of the emerging market economies, uncertainty in the economic conditions of the United States, China's New Economic Norms, and the struggle of the East Asian International Order. The third topic, "Finance", aimed to provide an analytical perspective over currency convertibility, unconventional monetary policies, and prospect of cooperation between Belt-Road Initiative and TPP in the global economic governance. The conference concluded with the major  findings and policy implications from the earlier sessions, particularily, monetary policy response in emerging economies and the importance of strengthing the North Pacific cooperation were discussed.
 

Preface

Contributors

Introduction and Overview

Part 1. Regional Integration in Northeast Asia: Status and Potential

A Northeast Asian Economic Community: A Korean Perspective
Chang Jae Lee

Introduction
Recent Trade Situations of China, Japan, and Korea
China-Japan-Korea FTA (CJK FTA)
Conclusion
References

A Northeast Asian Economic Community: A Chinese Perspective
Fu Jingyun

Evolution of China’s FTA and Regional Economic Integration Policies
Overview of China’s FTA Network
Characteristics of China’s FTA Policies
Prospects of China’s FTA Policies and Their Implications for the Region

A Northeast Asian Economic Community: A Japanese Perspective
Yasuo Tanabe

A Northeast Asian Economic Community
An Asian Energy Partnership
Japan-China Energy Conservation Forum
Conclusion

A Northeast Asian Economic Community: A Russian Perspective
Sergei Sevastianov

Introduction
Past and Present Russian Regional Policy in the Far East
Development of Energy and Transport Infrastructure in Eastern Siberia and the Russian Far East
Russian View and Possible Role in NEA Integration
Subnational Models of Economic Cooperation in NEA
Conclusions and Recommendations:

Toward a Northeast Asia Economic Community: Lessons from the European Union (EU), Good and Bad
Glyn Ford

EU lessons for Northeast Asia

Potential for Connectivity in Northeast Asia: Energy and Transport Infrastructure in Eastern Siberia and the Russian Far East
Dmitry Reutov

Energy Projects
Transportation Infrastructure
Conclusion

Part 2. Renewable Energy in Northeast Asia and Prospects for the Region

China Renewable Energy Development and Future Prospects for Cooperation
Shi Dinghuan

History and Mission of the China Renewable Energy Society
Renewable Energy in China
Prospects for Northeast Asia Cooperation

Status of Renewable Energy Development―Toward a Low Carbon Society
Yoshiki Iinuma

Hawaii’s Clean Energy Transformation
Mark Glick

Introduction
Renewable Energy and Energy Savings
Tackling Transportation
Reducing Energy Demand
Hawaii: A Clean Energy Test Bed

Part 3. Financial Cooperation in Northeast Asia

Financing the Asian Infrastructure Investment Bank (AIIB):
Issues for Further Discussion
S. Stanley Katz

Development Bank Objectives
AIIB Financial Arrangements and Parameters

Creating a Multilateral Development Fund for Financial Cooperation in Northeast Asia
Jai-Min Lee

Recent Developments Impacting the Northeast Asian Development Bank Proposal
Creation of NEA Fund
Role of the Greater Tumen Initiative (GTI)
Conclusion

Establishing a Northeast Asian New Financial Institution to Promote Regional Economic Cooperation and Development
Zou Lixing

Strategic Value of and Market Demand for a Northeast Asian New Financial Institution
The Relationship between a New Northeast Asian Financial Institution and
the Asian Infrastructure Investment Bank (AIIB)
Basis and Path to establish a New Northeast Asian Financial Institution

Financial Cooperation in Northeast Asia: Japan’s Perspective
Hideo Naito

The Potential of Northeast Asia
Recent Trends in Financial Cooperation in Northeast Asia
Partnership for Quality Infrastructure
Japan and NEA Potential
Public Private Partnership (PPP) Readiness in Asia-Pacific

The Belt and Road Initiative: Ambition and Reality of China’s “Go Global” Strategy
Liu Ming

Background of the Belt and Road Initiative
Belt and Road Initiative: Challenges
Conclusion

Appendix
 

The Northeast Asia Economic Forum (NEAEF) is a regional nongovernmental organization created in 1991 to sponsor and facilitate research, networking, and dialogue relevant to the economic and social development of Northeast Asia. The Forum is also committed to promoting understanding and relations among the peoples of Northeast Asia, North America, and Europe.
 The main objective is for NEAEF to conduct research and conference activities aimed at functional economic cooperation such as cross-border energy, transportation and logistics infrastructure development, and capital mobilization. The Forum holds annual conferences, workshops, and seminars for planning, facilitating, coordinating, and implementing international and interdisciplinary solutions to common policy problems. It is the only nongovernmental regional organization in which all the nations of Northeast Asia and the US are consistent and active participants.
 In collaboration with the Korea Institute for International Economic Policy (KIEP), in 2015 NEAEF carried out activities on building a Northeast Asian Economic Community based on lessons learned from NEAEF’s previous work on financing cross-border functional economic cooperation. For the first year of this collaborative project the focus was on regional cooperation and strategies in Northeast oriented toward North Korea―this work focused on functional economic cooperation in cross-border resources, energy supplies, infrastructure construction, capital mobilization, and institutional development.
 This volume is the first part in a series of proceedings titled Building a Northeast Asian Economic Community. It contains presentations and summaries from the NEAEF Beijing Special Meeting and the related activities that took place under this project. The aim of the project is to contribute to and encourage activities and efforts toward regional economic integration in Northeast Asia. 

Introduction and Overview 
Affiliations of the Contributors 
Keynote Address
Are Mega Free Trade Agreements the Best Alternative for Advancing Global Trade Liberalization? / Cae-One Kim

Session 1 Prospects for the Region’s Economies
 
Assessing Macroeconomic Policies in the US in Response to the Great Recession / David J. Stockton
Introduction 
Key Characteristics of the Recession and Recovery 
The Response of Monetary and Fiscal Policies 
Prospects for US Macroeconomic Policies and the Implications for the Economy 
Risks to the US Outlook and the Implications for the North Pacific Economies 
Conclusions
 
Challenges and Opportunities in China’s Economy / Wang Yijiang
Introduction  
Economic Challenges for China 
New Opportunities 
Concluding Remarks 

Abenomics and Beyond: The Japanese Economy in the 2010s / Tokuo Iwaisako
Introduction  
Brief Chronology of Abenomics 
Japan’s Macroeconomic Performance under Abenomics 
Potential Dangers for Abenomics 
Conclusion
 
Prospects of the Korean Economy / Il Houng Lee and Seongman Moon
Introduction  
Searching for Lost Economic Growth in Korea 
Reasons for the Decline in Domestic Demand Growth 
Conclusion
 
Commentary:
Prospects for the Region’s Economies: Discussion on Session 1 Papers / Sang-Hyop Lee
Report of the Session Rapporteur:
Prospects for the Region’s Economies: Overview by Session Rapporteur / Michael G. Plummer

Session 2 Pathways toward Trade and Investment Integration in the North Pacific Region 

The Trans-Pacific Partnership (TPP) as a Pathway to Asian Integration / Deborah Elms
The Goal: Free-Trade Area of the Asia-Pacific (FTAAP)  
Two of Four Pathways in Play 
The Launch of the TPP 
Specific Benefits of the TPP: Market Access for Goods 
Additional TPP Provisions 
Last-Minute Shaving of Quality? 
TPP Timelines 
TPP Institutional Framework 
Trade and Investment Diversion Coming 
Circling Back to the FTAAP
 
The Regional Comprehensive Economic Partnership (RCEP): Design, Status, and Challenges / Zhang Jianping and Nie Wei
Status of RCEP Negotiations  
Dilemma of RCEP Negotiations 
Compared with TPP, Is RCEP More Welcomed by Developing Economies in the Asia‑Pacific Region? 
Challenges of the RCEP under the Framework of Five “10+1” FTAs 
General Perceptions or Concerns about FTAs in China 
Implications of RCEP for FTAAP Proposals 
Implications of the RCEP for the North Pacific Economies 
Conclusion
 
China–Japan–Korea Free Trade Agreement (CJK FTA): Design, Status, and Challenges / Dukgeun Ahn
State of the Play of the CJK FTA  
CJK Trade and Economic Assessment Result 
Mega FTA Competition and CJK FTA 
Issues for Negotiation 
Challenges Ahead 

Commentaries:
Pathways toward Trade and Investment Integration in the North Pacific Region: Comments / Kiyoun Sohn
Pathways toward Trade and Investment Integration in the North Pacific Region: Discussion of Papers Presented in Session 2 / Michael G. Plummer
Report of the Session Rapporteur:
Pathways toward Trade and Investment Integration in the North Pacific Region: Overview by Session 2 Rapporteur / Theresa M. Greaney

Session 3 Assessing Economic and Social Change in North Korea 

Can North Korea Follow China’s Path of Reform and Open Door Policy? / Zhou Huji
China’s National Security, the Transformation of Political Concept and Open Door Policy  
Kim Jong Il’s Political Ideas and Survival Strategy 
“Songun Politics”: One of the Political Survival Strategies 
Improved Leader Worship: One of the Political Survival Strategies 
“7.1 Measures”: Economic Survival Strategies 
Nuclear Development and Asymmetric Dampening: International Survival Strategy 
Survival and Emerging from the Crisis: Conclusion and Discussion 

Economic Developments in North Korea / Marcus Nolan
Introduction  
Internal Developments 
External Relations 
Illicit Activities 
Conclusions
 
The Current Situation and Future Prospects of the North Korean Economy / Dongho Jo
Introduction  
The Current Situation 
The Reaction of the North Korean Leadership 
The Future Prospects 

Commentaries:
Assessing Economic and Social Change in North Korea: Discussion on Session 3 Papers / Hyung-Gon Jeong
Assessing the Economic and Social Change in North Korea: Discussion on Session 3 Papers / Nicholas Eberstadt
Report of the Session Rapporteur:
Assessing Economic and Social Change in North Korea: Overview by Session 3 Rapporteur / Anjali Nath

Roundtable Discussion on Strengthening North Pacific Cooperation 
North Pacific Integration from an International Financial Perspective / Hiroyuki Ito
Introduction  
Interest Rates Linkages and Their Implications on Monetary Policy Management  
“Internationalization” of the Renminbi 
Conclusion
 
Comments Based on the Roundtable Discussion / Tokuo Iwaisako
Comments Based on the Roundtable Discussion / Jong Seok Kim
“The Asian Paradox” 
The Limits of Bilateral Talks 
The Need for Multilateral Dialogs 
Soft Issues 
Harmony in Diversity 

Comments Based on the Roundtable Discussion / David J. Stockton
The Global Influences of Half of the World: Comments on North Pacific Cooperation / Wang Yijiang
Report of the Session Rapporteur
Strengthening North Pacific Cooperation: Overview by Roundtable Rapporteur / Duyen Bui

Conference Program
Program 
List of Participants

The conference was held on July 25, 2014 co-organized by the Korea Institute for International Economic Policy (KIEP) and East-West Center (EWC) in Honolulu. The key factors of the conference was to shape the economic future of the major North Pacific countries and the importance of economic cooperation among them. Major topics to be addressed were (1) the macroeconomic performances and outlooks of China, the United States, Korea, and Japan, and the interrelationship among them, (2) the emerging multilateral economic architecture and its implications, with specific reference to the TPP, the RCEP, and China-Japan-Korea free trade prospects, and (3) the future of the North Korean economy and its implications for North Pacific cooperation. The main sessions of the conference covered ‘Prospects for the region’s economies’, ‘Pathways toward trade and investment integration in the North Pacific region’, ‘Assessing economic and social change in North Korea’.

Preface
Contributors
Introduction and Overview
Statements by Hosts and Country Representatives

Part I. Regional Economic Cooperation in Northeast Asia: Country Perspectives
- A Korean Perspective (Chang Jae Lee) 
- A Chinese Perspective (Zhang Jianping)
- A Japanese Perspective (Maeda Tadashi)
- A Russian Perspective (Pavel Minakir)

Part II: Energy Cooperation: Energy Infrastructure and Physical Connectivity
Japan’s Energy Challenges and Potential for Regional Cooperation (Tanabe Yasuo)
Energy Issues: Security, Alternative Systems, and Low-Carbon Futures (Terry Surles)
Prospects for a Cross-border Power System in Northeast Asia (Iinuma Yoshiki)
Energy Cooperation in Northeast Asia: A Russian Perspective (Sergey Sevastianov)

Part III: Regional Cooperation and Integration
Regional Cooperation and Integration in East and Northeast Asia (Kilaparti Ramakrishna)
Cultivating Multilateralism in East Asia (Iwatani Shigeo)
Regional Integration in Northeast Asia (Wang Weina)

Part IV: Financing Regional Economic Integration through Cross-border Infrastructure Construction: Review and
New Approaches to Regional Multilateral Financial Institutions

Keynote Statement—Fulfilling a Long-held Dream: Financial Policy for a Unified Korea (Shin Je Yoon)
A Strategy toward a Regional Multilateral Financial Institution (Lee Jai-Min and Kim Yu-Ree)
Establishing a New Development Financing Institution: Comments and Observations (S. Stanley Katz)
Northeast Asian Financial Cooperation in a New Era (Fan Xiaoyun)
Comments on Financial Cooperation in Northeast Asia (Zou Ping)

Part V: Cross-border Economic Cooperation: Tumen River Area Economic Integration for the Korean Peninsula

Political and Economic Imperatives behind North Korea’s Evolving Special Economic Zones (Glyn Ford)
Underdeveloped Sino-Russian Cross-border Cooperation (Natalia Ryzhova)
Creating a Northeast Asian Economy (Tony Michell)

Appendix I. Seoul Declaration and Agenda
Appendix II. Planning Meeting Summary and Agenda
Appendix III. Report of Field Visit to Rason Special Economic Zone, DPRK and Yanbian, China

The Northeast Asia Economic Forum (NEAEF) is a regional nongovernmental organization created in 1991 to sponsor and facilitate research, networking, and dialogue relevant to the economic and social development of Northeast Asia. The Forum is also committed to promoting understanding and relations among the peoples of Northeast Asia, North America, and Europe.
The main objective is for NEAEF to conduct research and conference activities aimed at functional economic cooperation such as cross-border energy, transportation and logistics infrastructure development, and capital mobilization. The Forum holds annual conferences, workshops, and seminars for planning, facilitating, coordinating, and implementing international and interdisciplinary solutions to common policy problems. It is the only nongovernmental regional organization in which all the nations of Northeast Asia and the US are consistent and active participants.
For the year 2014, NEAEF in collaboration with the Korea Institute for International Economic Policy (KIEP), cooperated in efforts toward achieving closer economic and financial cooperation in Northeast Asia, and continued its focus on research, the annual conference, and meetings aimed at financing regional economic integration and establishment of the Northeast Asian Bank for Cooperation and Development (NEABCD). This work aims to promote functional economic cooperation in terms of cross-border resources, energy supplies, infrastructure construction, capital mobilization, and institutional development.
NEAEF, as planned for the year 2014, facilitated conference and meeting activities in which experts presented their perspectives, views, ideas, concrete proposals, and strategies relevant to the issues of a regional institution for financial cooperation.
This volume, which is the final part of a series of proceedings titled Financing Regional Economic Integration and Functional Cooperation for Northeast Asia: Toward a Northeast Asia Economic Community, presents the results of a project implemented in 2014 that includes presentations and summaries from the 23rd annual NEAEF conference and meetings, as well as related activities.

Preface
Contributors
Introduction and Overview

Part 1. Investment Requirements and Strategies for Cooperation in Infrastructure and Energy Development in Northeast Asia

The Socio-Economic Situation in the Russian Far East and Prospects for Developing
Investment Cooperation with Northeast Asian Countries
A. B. Levintal

Cross-Border Economic Cooperation: Notes on Creating a Northeast Asian Economy
Tony Michell
1. Economic Cooperation in the Region
2. Chinese Investments in the Far East and Siberia
3. Agricultural Development
4. Multilateral Funding and Day to Day Banking
5. Why Land Transit Is Important
6. Road Connections
7. Cross-border Cooperation, Hubs, and Clusters
8. Multilateralizing Kaesong Industrial Estate
9. Dandong-The Last Frontier
10. The Disruption of Sanctions on Third Parties–The Need for A Study
11. The Disruption of Sanctions and the Need for a Fairer Sanctions Regime Development in the Future
12. Sanction Exempt Cross-Border Economic Cooperation
13. Conclusion: A Cross-Border Economic Cooperation Wish List for 2014

Challenges to a Northeast Asia Regional Logistics System Satoshi Inoue Port Cooperation in the Northeast Asia
Dong-Keun Ryoo
1. Introduction
2. Concept of Port Cooperation
3. Cases of Port Cooperation
4. Conclusion

Japan’s Sustainable Electric Future
Yoshiki Iinuma

A Note on Power Grid Interconnection in Northeast Asia
Mitsuho Uchida

Russia and Northeast Asia Energy Security
Sergei Sevastyanov
1. Key Findings
2. Introduction
3. The Main Principles of Russia’s New Energy Policy
4. Energy Security and Energy Market in Northeast Asia
5. Russia’s Activities and Vision for Energy Policy in Northeast Asia
6. Evaluation of Russia’s Input into Northeast Asia Energy Security
7. Recommendations and Conclusions

The Yellow River and Cooperation in Northeast Asia
Liu Ming

Part 2. Financing Economic Integration and a Regional Multilateral Bank: Research Papers on the Northeast Asian Bank for Cooperation and Development (NEABCD)

Creation of a Joint-Venture Bank by China, Japan, and Korea
Jai-Min Lee
1. Introduction
2. Challenges for development finance in Northeast Asia
3. Creation of a Joint-Venture Bank by China, Japan and Korea
4. Conclusion

Economic Development of the Russian Far East and the Northeast Asian Development Bank (NEADB)
Dmitry A. Izotov
1. Introduction
2. Economic Development Prospects of the Russian Far East and Foreign Economic Activity Alternatives
3. Development Programs of the Russian Far East and the Northeast Asian Development Bank (NEADB)
4. Conclusion

Re-analysis of Innovation in Asian Infrastructure Financing Mechanisms
Liqun Jin
1. Demand for Innovation in Asian Infrastructure Financing Mechanisms
2. Feasibility of Innovation in Asian Infrastructure Investment

Review and Strategy for the Proposed Northeast Asia Bank for Cooperation and Development
Byungwon Bahk

A Perspective from the Republic of Korea
Jae Hyong Hong

Appendix

Summary

The Seventh Meeting of the Ad Hoc Committee for Establishing the Northeast Asia Bank for Cooperation and Development
Nankai University, Tianjin, China
July 1-2, 2013

On July 1-2, 2013, the Seventh Meeting of the Ad Hoc Committee for Establishing Northeast Asia Bank for the Cooperation and Development (NEABCD) organized by Northeast Asia Economic Forum (NEAEF) was held at Northeast Asia Financial Cooperation Research Center (hereinafter refer to as the Research Center), at Nankai University, Tianjin, China. More than twenty leaders and experts from China, Korea, Japan, and the US attended this meeting. Prior to the meeting, Dr. Jiang Zhenghua, Former Vice Chairman of National People’'s Congress of China and Honorary Chairman of the Research Center, and Mr. Cui Jindu, Executive Vice Mayor of Tianjin Municipal Government and Honorary Chairman of the Research Center met Dr. Lee Jay-Cho, NEAEF and Research Center Chairman and all the foreign participants. The President of Nankai University, Dr. Gong Ke, attended this meeting as well. The meeting was organized by Dr. Lee Jay-Cho and Mr. Wang Shuzu, Former Deputy Chairman of Tianjin People’'s Congress and Deputy Chairman of the Research Center. Mr. Zhang Xiaoyan, Deputy Secretary of Tianjin Municipality and Director of the Research Center, Mr. Zou Ping, the Research Center Secretary General, Prof.
Ma Junlu, Executive Deputy Director of the Research Center, and Dr. Liu Ming, Deputy Secretary of the Research Center all expressed their views on the theme of the meeting. All the participants together discussed the latest developments on the subject of the proposed Northeast Asia Bank, and exchanged their views on new trends, ideas, perspectives and proposals. They agreed on the major issues summarized below.

I. Fully endorse the establishment of Northeast Asia Bank for Cooperation and Development In Dr. Lee Jay-Cho’'s remarks, he stated that at this year’'s summit meeting of Chairman Xi Jinping and President Barack Obama, there was a historic consensus on the need and importance of a mutual and closer relationship between China and the US for the future of the two largest economies of the world. The Assistant Secretary for Asian Affairs of the US state department believes that regional cooperation with Asia is utmost importance in the next ten years, and should be vigorously promoted.
Former Assistant Minister of Finance and Former Executive Vice President of the Asia Development Bank, Dr. Stanley Katz observed that, based on discussions in Washington regarding the BRIC Bank, the proposal lacks basic building blocks and a foundation based on experience and research. However, the US is not opposed to the establishment of the NEABCD. On the proposed Bank, Japan should portray a clearer attitude, China should release a positive massage initially, and then Korea will have a positive response.
The former Japanese Foreign Minister and the Research Center Honorary Chairman, Dr. Taro Nakayama addressed the meeting in a written statement saying that in order to pursue peace and security in Northeast Asia, regional development through economic cooperation should be our goal. If the cross-border gas pipeline from Siberia all the way to China, Busan Korea, and Fukuoka Japan, can be constructed, it can promote mutual understanding among these countries and people, and it might serve to prevent war and strife and build a system of mutual cooperation.
Large-scale cross-border infrastructure requires huge capital and funding. Therefore, it is necessary to establish a regional development bank for Northeast Asia. Dr. Nakayama expressed his willingness to work with meeting participants to realize this vision. Mr. Byungwon Bahk, the former Executive Vice Minister of Planning and Finance and Chairman of the Korean Federation of Banks, pointed out that the ADB only provides 0.9% of its funds to three northeast provinces in China and Mongolia, there still remains a large gap for establishing a Northeast Asian Bank for future dynamic economic development in Northeast Asia. He also stated that China should take the leadership in the Northeast Asian Bank, and persuade Japan, Korea, Russia, Australia, New Zealand, and other countries to participate. China, Japan, and Korea already have shown a willingness and ability to cooperate evident in their funding arrangements in ASEAN. Why can’'t these countries cooperate to establish funding arrangements for the Northeast Asia region? Japan and the US will not take the initiative in promoting the establishment of the Bank, but once China proposes doing so, Japan, and the US would not be opposed to it.
The chief representative of the Japan Bank for International Cooperation’'s Beijing office, Mr. Kikuchi on behalf of the Japanese Cabinet Adviser, JBIC Executive Director, Mr. Maeda stated that the opportunity for establishing the Northeast Asia Bank is ripe and Japan through establishment of the Bank would change the its role from simple investor to beneficiary/partner investor.
Dr. Zou Lixing, Deputy Director of China State Development Bank for Research and the Research Center Advisor, emphasized that the Northeast Asia Development Bank is important for regional strategic cooperation. It will promote the development of regional infrastructure, economic development and corporation through trade, financial cooperation, cultural exchanges, etc. The establishment of the NEABCD will become a new driving force of economic development in Northeast Asia and a useful compliment to the existing international multilateral financial institutions.
Mr. Kwan-Yong Park, Former Speaker of the Korea National Assembly of Korea, underscored the great significance in the establishment of a Northeast Asia Bank. He stated his belief that most important is to promote the cooperation and collaboration of all countries involved and his hope that we can work together for a common understanding of our goal.
The Former Vice Chairman of China’'s National People’'s Congress and honorary Chairman of the Research Center, Dr. Jiang Zhenghua stated that, peaceful development and win-win cooperation is not only the world trend, but also China’'s responsibility.
The leaders of China’'s State Council repeatedly instructed the relevant departments to conduct a study on the establishment of the Northeast Asia Bank, stating that we now have a better vision for establishing the Bank. They stressed that we should not limit ourselves to the region of Northeast Asia, but set a wider framework and be more inclusive. We can start from reality, and consider and envision a long-term strategy.
The information, input, and ideas provided by the participants from China, the US, Korea, Japan, and other countries showed that the continued efforts to set up the Northeast Asia Bank rest on a solid social and economic foundation. The meeting concluded that the establishment of the Northeast Asia Bank is currently in a most critical period –. it requires that all the relevant countries bolster their confidence and continue their work.

II. The new connotation and orientation of the Northeast Asia Bank
Liqun Jin, the Chairman of China International Capital Corporation Ltd., Advisor of the Supervision and Guidance Committee of the Northeast Asia Financial Cooperation Research Center, and Former Vice Minister of Finance stated in a written statement that, given Asia’'s economic growth and its energy and infrastructure investment demands, currently available financing channels are inadequate and therefore, innovative financing mechanism are necessary. Asia should establish a multilateral financial institution that would run parallel to the ADB system, and would help meet the need for infrastructure construction and economic development. China needs to further strengthen financial cooperation with Northeast Asia and Asia. The Northeast Asian Bank represents such an innovative financing mechanism.
Zou Ping, Chairman of the China Asia Pacific Institute and Secretary General of the Research Center for Financial Cooperation in Northeast Asia stated that in accordance with the “"open development, cooperative development, and win-win development”" requirements, we should insert the establishment of the Northeast Asian Bank into a broad strategy of innovative mechanisms for investment in and financing infrastructure development in Asia. The Northeast Asian Bank would be open to participation by Northeast Asia and Asian countries with China taking a lead and in Northeast Asia it would principally focus on cross-border infrastructure investments.
Zhang Jianping, Senior Economist and Director of the Department of International Regional Cooperation, Institute for International Economic Research, National Development and Reform Commission (NDRC) argued that China, Japan, and South Korea already work together through the China-South Korea FTA and the China-Japan-South Korea FTA negotiations. The regional trade will increase rapidly after the two FTAs are established and they will need the safeguard and guarantee of the Northeast Asian Bank. The establishment of the FTAs and Northeast Asian Bank share some common ground and thereby the establishment of each will contribute to the other.

III. Main consensus and suggestions at the meeting
1. The meeting approved in principle “"The report in 2013 on setting up the Northeast Asia Bank for Cooperation and Development”" drafted by the research center.
After modification and improvements, the report is scheduled to be submitted for discussion at the twenty-second annual Forum Conference in Vladivostok, Russia in August 2013, aimed at obtaining a broader consensus and further extending the international thrust. The Northeast Asia Economic Forum will submit it to the relevant policy institutions of the Chinese, Japanese, and Korean governments at an appropriate time.
2. The meeting endorsed the proposal that the Northeast Asia Bank can be put into an innovative mechanism of investment and financing for developing cross-border infrastructure interconnections. The most important task is to act as soon as possible. The Northeast Asian countries will play the leading role and the participating countries can be expanded to other areas of Asia, including Australia and New Zealand.
3. Expecting China to play an important role in the establishment of the Northeast Asia Bank, we suggest China could initiate the proposal for the establishment of the Northeast Asian Bank initiatively. South Korea will give a positive response and jointly promote the establishment of the Northeast Asia Bank with China as well as leading the way for Japan, Russia, Mongolia, the United States and other Asia countries to participate in it.
4. The Northeast Asia Economic Forum will continue to play a coordinating and catalytic role, by disseminating relevant information and promoting dialogue with policymakers in Northeast Asia. Tianjin Municipal Government, according to the needs of an innovative mechanism for investment and financing Northeast Asian infrastructure interconnections, will pursue further studies and develop strategies for the Northeast Asian Bank taking into consideration any new international circumstances. This will serve as a reference base for policy decisions.
5. It is hoped that the participants will make timely report on the meeting results to the relevant government institutions, in order to obtain the support of central governments. At the same time, we hope each country will encourage their national think-tanks to exert their influence by participating in policy research on the establishment of the Northeast Asian Bank.
The Seventh Meeting of the Ad Hoc Committee finds that, through the exchange of communication, we can further understand what should be done and how, and we can promote mutual understanding to reach a necessary consensus for further achievements. The meeting stressed that the Tianjin Municipal Government has and will play a very important role in the establishment of the Northeast Asian Bank. We expect China to play the leading role in encouraging breakthroughs in financial cooperation in Northeast Asia.

Acknowledgements

Notes on the Contributors

1. Services Trade Liberalization between Taiwan and China: Assessing the Impacts of the ECFA and Its Future Development ― A One Year Review of Taiwanese Banks in China - Kristy Tsun Tzu HSU (徐遵慈)
Introduction
Assessing the ECFA and Its Effects
Taiwanese Banks in China: First Year’s Review
Conclusions
References

2. Accession to the WTO: The Case of Azerbaijan - Aynura ISMAYILOVA
General Review
Historical Review of the Economics for the Last 20 Years: from 1991 to 2012
Azerbaijan is on the Way to WTO Membership: from 1997 until 2012
Azerbaijan’s WTO Membership Wish: Expectations for Future
References

3. Features of the Currency Policy and Exchange Rate of Belarus in the Conditions of Forming the Common Economic Space - Maryna Markusenka
Introduction
The Currency Exchange Rate Adjustment in the Republic of Belarus
Scientific Base of Methods and Instruments of Monetary Policy in the Common Economic Space (CES) Conditions
Conclusions
References

4. Services Sector in India and India-Korea Economic Cooperation - Sandip Kumar Mishra
Introduction
Services Sectors of India
Issue of FDI in Services Sector
Issue of Employment
Challenges and Prospects in the Indian Services Sector
India-Korea Economic Cooperation
CEPA and Economic Cooperation
Indian Services Sector and Bilateral Cooperation
FDI from South Korea
Concluding Remarks

5.The Impact of the Internationalization of the Renminbi on Asian Economies - Lee-Rong Wang
Introduction
Body
Conclusions
References

6. Comparative Research on Automotive Industry Policies between South Korea and China - Fu Baozong
Introduction
Comparison of China and Korea's Development of Automobile Industry
Similarities in Automobile Industry Policies of China and Korea
Differences of Automobile Industry Policies between China and KoreaComparison on Results of Automobile Industry Policies between China and Korea
Conclusions
References

7. Private Economy and Economy Transformation in China - Liu Xianwei
Introduction
Development of Private Economy in China
The Key for China’s Economy Transformation
Historical Mission of China’s Private Economy
Suggestion and Conclusion
References

8. Azerbaijan Economy: Diversification in lens of Modernization - Vusal Gasimli
Introduction
Diversification Trends
Causality Relationship between Economic Growth and Labor Productivity
Conclusion
References

9. Building a Korean-Portuguese Business Partnership for Sub-Saharan Africa: Opportunities and Challenges In Mozambique - Luis Mah
Introduction
From “Hopeless” to “Hopeful” Continent: The Rise of Sub-Saharan Africa
Go Africa? Korea´s Engagement with the Emerging Continent
The Political Economy of Mozambican Growth and Development
Portugal as a Business Partner for Korea in Mozambique
Conclusion
References

10. The Second-Tier “Tigers” in the Light of Latin American Experience - Victor Krasilshchikov
Introduction: “Unhappy” Latin America and “Lucky” East Asia
Comparing Latin America to East Asia: Visible Differences and Hidden Similarities
“A Santa Fé” Tecnocrática: The Brazilian Experience and Its Implications
The Second-tier “Tigers” from the Rise to Distress (1970s – 1997)
The Post-Crisis Development (1998 and onwards): Did the “Tigers” Make Right Conclusions?
Towards a Knowledge-Based Society?
Conclusion
References

The Korea Institute for International Economic Policy (KIEP) was founded in 1989 as a government-funded economic research institute. It is a leading institute focusing on international regional studies with strong cooperative relationship with the world’s leading research institutes. The Center for Emerging Economies Research (CEER) has been enforcing visiting fellows program since 2008 in an effort to vitalize exchange among internal and external institutions and enrich competence in regional studies. This program cultivates close network and promotes cooperation through sharing of research outcomes and information among eminent scholars and experts of regional studies. ‘KIEP Visiting Scholars’ Paper Series’ is an accomplishment of this program that enabled higher understanding of international regional studies.