WASHINGTON, March 16 (AFP) - Powered by 60 percent of the world's foreign exchange reserves, East Asia should have an effective mechanism for exchange rate cooperation that can resist US pressure on currency and trade policy, experts said Tuesday. Finance ministers of East Asian economies Japan, China, South Korea and the 10 members of the Association of Southeast Asian Nations (ASEAN) have just started to discuss exchange rate issues. But the "ASEAN plus three" meeting has not graduated to exchange rate cooperation, like the forum of the Group of Seven finance ministers and central bank governors. Speaking at a conference in Washington on the future of economic relations between the United States and East Asia, a special adviser to the Japanese cabinet proposed that the East Asian countries "considerably strengthen" the meeting among their finance ministers "as a body for exchange rate cooperation by including central bank governors." Such cooperation could include the current issue of undervaluation of the Chinese yuan, said Haruhiko Kuroda, who is also a professor at Japan's Hitotsubashi University. "Since the renminbi issue is far more serious for East Asian economies than the US or Europe, this should be welcomed," said Kuroda, a former vice-minister of finance. The United States especially wants the yuan, which has been firmly fixed to the greenback, to be revalued, arguing that Chinese authorities have kept the currency artificially depressed in order to increase the competitiveness of Chinese exports. The yuan is also undervalued against the other East Asian currencies, eroding the international competitiveness of their economies. Kuroda said that if ASEAN countries wanted a "stable exchange rate relationship" by pegging their currencies to a common currency basket -- a long term aim of the 10-member group, "then the ASEAN plus three can become the G4 (Japan, China, South Korea and ASEAN) and facilitate far more effective cooperation in the region." But he said any exchange rate cooperation as broad as that among the United States, Japan and East Asia would not be easy. Kuroda said another way for cooperation was to invite the Chinese finance minister and central bank governor to the G7 ministerial meeting to discuss exchange rate issues. "This could be and should be done, once the renminbi is adjusted and capital controls (in China) are relaxed," he said. "Then G7 countries and China should jointly monitor the exchange market and cooperate as necessary. At that point, the structure of the G7 itself might need to be reviewed." Japan is the only Asian nation in the G7 umbrella of industrialised nations. Randall Henning, a fellow at the Washington-based Institute for International Economics, said US pressure on East Asian states for adjustment of their exchange rates was also likely to motivate regionalism. "China is now the lightning rod for protectionism in the United States that Japan represented a decade ago," he said. "Korea may not completely escape being targeted either." Malaysia, which moved to peg its ringgit currency against the US dollar against the wishes of the International Monetary Fund (IMF), is also under pressure from many groups to refloat its currency. Henning said as Washington continued to press, East Asians would have an "incentive to put aside and reconcile (not dismiss) their considerable differences and reach a modus vivendi on financial questions of common interest. "Because I expect US pressure to continue, off and on, and East Asian reserve holdings to remain very high relative to the region's voting power in the IMF, I am confident that the regionalism will continue to have political momentum for quite some time in East Asia," he said. The 13 East Asian economies now hold more than 60 percent of the world's foreign exchange reserves totally 1.6 trillion dollars. But they hold less than 13 percent of the quotas in the IMF, to which voting shares are closely tied. This creates another incentive for East Asian cooperation -- lending reserves when the need arises bilaterally or regionally at their own terms, the conference was told. pp/mk