Leaders agreed to establish a free trade area in the world's fastest growing region with China warning that economic recovery was not certain.
Asia-Pacific leaders agreed to start establishing a free trade area in the world’s fastest growing region with China warning that global economic recovery was far from certain and protectionism was rising.
The weekend summit followed hot on the heels of a meeting of leaders of G20 advanced and emerging countries whose vague agreement gave little sense of a united approach to preventing further economic crises.
The troubles still facing the global economy was underscored by the likelihood that Ireland will have to seek emergency funding because of deepening debt concerns.
“As a result of the concerted action of the international community, the world economy is slowly recovering. Yet the recovery is neither firmly established nor balanced, and there exist significant uncertainties,” Chinese leader Hu Jintao told leaders of the 21-member Asia-Pacific Economic Cooperation (Apec).
He said protectionism had risen notably, adding: “We should emphasise sustainable growth, which includes not only resource and environmental sustainability but also sustainability of fiscal, monetary, trade and industrial policies, and the reduction of macroeconomic volatility and risks.”
In a statement at the end of the Apec summit, leaders agreed to refrain from competitive devaluation of currencies and that it was critical to establish more balanced and sustainable growth—the same as agreed at the G20 summit on Friday.
They also agreed to start work on a vast regional free trade area linking the world’s three biggest economies—the United States, China and Japan—with some of the world’s fastest-growing economies who together account for over 40% of global trade.
But the goal of balanced growth is proving elusive given deep divides among advanced and emerging economies that were papered over at a G20 summit in Seoul.
The cracks were on display in the Japanese port city of Yokohama, where Washington and Beijing returned to their contradictory positions on trade and currency.
The United States argues that the global economy can only recover if its own economy is on the mend, which requires a surge in exports. It has singled out China and its strong yuan as being a major barrier to that goal.
US President Barack Obama, at the start of the Apec gathering on Saturday, warned countries such as China against relying too much on exports for growth.
Hu countered that Beijing was committed to exchange rate reform, but that it would be gradual.
The United States contends that China’s currency is undervalued, giving it an export advantage. Beijing argues the US Federal Reserve’s easy-money policy is aimed at weakening the dollar to boost exports and could destabilise other economies.
Regional security strains have also simmered beneath the communal goodwill at Apec.
Japanese Prime Minister Naoto Kan met his Chinese and Russian counterparts on Saturday in a bid to soothe ties frayed by territorial rows.
Kan met Hu for their first formal talks since a feud flared up in September over wind-swept isles in the East China Sea that are claimed by both countries and are near potentially vast maritime oil and gas reserves.
Sino-Japanese ties have soured since Japan detained the captain of a Chinese fishing boat that collided with Japanese patrol boats near the disputed islands, risking fallout for trade and investment links between Asia’s two biggest economies.
A Japan official called the 22-minute meeting a “big step towards improvement”, but domestic media were less enthusiastic. The Yomiuri newspaper said the chat had simply avoided the “worst-case scenario” of yet another snub by China.
Tensions between Asia’s two biggest economies have been on the boil since September when Japan detained a Chinese skipper whose fishing boat collided with Japanese patrol vessels off disputed islands. The skipper was later released and sent home, but diplomatic strains have festered.
In a sign that ties remain fragile, a Japanese official quoted Chinese Foreign Minister Yang Jiechi as saying an “environment” was needed before Beijing would reopen talks over gas fields in the East China Sea with Japan.
Kan also met Russian President Dmitry Medvedev in an effort to thaw a chill after the Russian leader visited one of the islands north of Japan that are claimed by both Moscow and Tokyo.
The two countries’ foreign ministers agreed to improve ties, but in a sign strains remained, Medvedev urged Japan to abandon its “emotional stance” on the issue and talk business instead. - Reuters