Currency swap line with China raised to $56.6 bln

South Korea and China agreed Wednesday to expand their currency swap line to more than 56 billion U.S. dollars to guard against financial turmoil and economic uncertainty.

The agreement was signed in a meeting between Prime Minister Kim Hwang-sik and Chinese Vice Premier Li Keqiang in Seoul Wednesday morning. Under the deal, the central banks of both sides will expand their won-yuan swap worth 180 billion yuan (28.4 billion dollars) to 360 billion yuan (56.6 billion dollars), extending the contract through October 2014.

In December 2008, Seoul and Beijing formed a swap agreement worth 180 billion yuan that is to expire in April next year.

Kim also signed a memorandum of understanding with Li on four sectors, including an employment permit system, quarantine cooperation for Korean exports of fresh farm produce to China, and the setup of an inter-country e-commerce policy council.

President Lee Myung-bak also hosted a meeting with Li, who is considered to be China`s next leader, saying, “I’m sure that the swap line expansion will contribute to stabilizing the Asian financial markets.”

On Li`s meeting with North Korean leader Kim Jong Il in Pyongyang a few days ago, President Lee said, “It`s a good sign that the leaders of the two countries meet each other frequently so that China can encourage North Korea to learn from its successful reform strategies. I sincerely hope China continues to play a crucial role in denuclearizing North Korea and urging the country to reform.”

Li said, “Through an in-depth discussion with Kim Jong Il, I stressed a number of times the need to denuclearize the Korean Peninsula and establish a peace regime there.”

The meeting continued for an hour but Li reluctant to say more about his meeting with the North Korean leader.

“Vice Premier Li didn’t talk about the details of his meeting with Kim Jong Il,” said an official at the presidential office.

srkim@donga.com january@donga.com