Premier Wen Jiabao proposed expanding currency swaps with Russia and four Central Asian nations, as regional leaders ended a meeting with calls to increase financial co-operation to provide a buffer fluctuations in the global economy.
The Shanghai Co-operation Organisation (SCO) issued a communique at the end of its two-day, prime-ministerial-level meeting in St Petersburg, Russia, saying emerging economies would play a crucial role in stabilising the faltering global economy.
Wen suggested increasing the use of currency swaps and co-operating more on yuan-trade settlement with member countries, according to Xinhua.
Professor Xiao Xian, dean of Yunnan University's school of international relations, said Wen's remarks and the communique suggest that there is a growing will among SCO members to expand their co-operation from politics and security to trade and finance.
Xiao said the organisation was originally designed to meet regional security challenges following the September 11 terrorist attacks in the US but there was now a desire among members about expanding co-operation to the economic sphere.
The SCO, founded in Shanghai in 2001, groups China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan.
India, Iran, Mongolia and Pakistan are SCO observers, while Sri Lanka and Belarus are its dialogue partners.
Wen suggested SCO members build a multi-level and multi-channel financing co-operation system to provide support for regional economic co-operation projects.
The SCO should not only be able to weather economic tests but also seize the opportunity for growth, Wen said.
Tao Wang, chief China economist with UBS Securities, said the expansion of currency swaps and yuan-trade settlements would boost the renminbi's status outside China.
'It is part of the ongoing progress of the yuan's internationalisation, and there is great potential in regard to trade and investment among these emerging economies,' he said.
The yuan advanced after Wen's remarks, strengthening 0.07 per cent to 6.3465 per US dollar in Shanghai, according to the China Foreign Exchange Trade System.
Xiao said there was growing demand among SCO nations for Chinese funding, investment, technology and industrial products, as China's appetite increases for energy, minerals and other raw materials from those nations.
Amid increasing uncertainty in global markets, SCO member states should further strengthen economic co-operation in order to protect their countries' banking and financial sectors, the leaders said in the joint communique.
The SCO would continue to encourage investment and advance mutually beneficial projects among member states, it said, and it was therefore of great importance to establish a financing mechanism for joint projects, including special accounts and development banks for the SCO.