The Impact of “Chiang Mai Initiative” on Financial Integration of East Asia: The Critical Juncture Analysis on Perspectives of Japan and China before and after "Chiang Mai Initiative"

From 1980s, economic integration of East Asia took off via Japanese production network. The developmental patter, trade structure of East Asia also got integrated from that time. However, in financial area, the integration process still stagnated till 1997 East Asian financial crisis. ASEAN Plus Three (APT) and Chiang Mai Initiative (CMI) came into existence after the crisis, East Asian financial integration process move forward through APT, and APT stepped the process up steadily.
APT member states (East Asian states) decided to multilateralize CMI into a “reserve pooling arrangement” during Kyoto APT Finance Ministers’ Meeting in 2007. Even so, integration process didn’t advance since member states could not have consensus on the proportion of contribution of the pool. At the end of 2008, East Asia ran into another financial crisis which caused by the U.S. subprime crisis. Another depression spurred member states to finalize the canvass of mulilateralization of CMI. After the two APT Finance Ministers’ Meetings in 2009, Chiang Mai Initiative Multilateralization (CMIM) came into being, and the amount of the reserve pool was set at 120 billion U.S. dollars. CMIM has entered into force since March 2010.
Surveying the history of East Asian financial integration, it’s not difficult to find that “crisis” has been the center of integration process; hence, I apply one of historical institutionalism concept which is called “critical juncture” to analyze East Asian financial integration. The historical memories and geostrategic considerations had been the main obstacles of progress on integration; therefore, only after huge crises caused catastrophes to East Asian states, they started to think of that to solve problems through collective actions. Crises are critical junctures on one hand, and on the other, cooperation (integration) is the form of collective actions.
It’s believed that integration will become easier if there is a regional hegemon state leads the way. In East Asia, Japan and China are the two regional (and global) powers, the key of integration is that who can possess the leadership. For this reason, this research will focus on Japan and China’s regional integration policy and the competition between the two powers on leadership as well.
I will make a brief economic and political literature review of regional integration, and then will turn the focal point to literature of East Asian integration. Besides, I portray the evolution of Japan and China’s regional integration policy before 1997 as the background of East Asian financial integration. Furthermore, CMI and CMIM are results of critical junctures (crises), and competition between Japan and China is the crucial factor which influenced the form of integration. They are the core of this research. The final part is my conclusion and prospect of this research.