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SINGAPORE—Finance Ministers representing the 21-member Asia-Pacific Economic Cooperation (Apec) bloc said
Apec Finance Minister meet in Singapore today (Photo: Simon Roughneen)
today that members should start to rein in the massive “stimulus” spending used by governments to offset the impact of the global economic crisis.
Speaking at the Ministers’ press conference after morning meetings in Singapore, the ministers said concerted and collaborative efforts would be needed to ensure a return to economic growth and maintain dynamism going forward.
Noting differences in economic development across the vast region—which takes in countries as diverse as Papua New Guinea, Peru, Mexico and Vietnam—delegates pointed out that some countries will be able to cut back on heavy government spending sooner than others.
While New Zealand will curb stimulus spending soon, the US will continue to pump government money into the economy, which is likely to add to the massive US treasury deficit.
US Treasury Secretary Tim Geithner praised the role of Asia and China in helping his country and the rest of the world revitalize their economies, though the ministers cautioned that the road to full recovery was far from assured.
“We’re seeing Asia lead the world back to recovery; we’re seeing growth resume in the US and countries around the world after the worst recession we’ve seen in decades,” he said.
However the Finance Ministers did not get into controversial questions, such as the value of China’s yuan.
“We will undertake monetary policies consistent with price stability in the context of market-oriented exchange rates that reflect underlying economic fundamentals,” the ministers said, without mentioning specific currencies.
The US has made calls in recent years for China to revalue its currency against the US dollar, something Beijing is likely loathe to do given its vast holdings of US Treasury bills.
China has no plans to alter its policy of step-by-step changes in the value of its currency, Assistant Finance Minister Zhu Guangyao said at the ministers’ press conference.
Writing under a joint byline in the Wall Street Journal on Wednesday, US Treasury Secretary Tim Geithner and his Indonesian and Singaporean counterparts Sri Mulyani Indrawati and Tharman Shanmugaratnam pre-empted today’s meeting, saying Apec members need “market-oriented” currencies that are in line with their economic fundamentals to encourage new sources of growth.
This statement seems to reflect concerns over China’s yuan policy, despite repeated pledges by Beijing to move toward market-based exchange rates.
European and other Asian exporters have been pressured by the Yuan’s peg against a weakening US dollar, which makes Chinese exports relatively cheaper, and thus more competitive overseas.
Geithner backed the continued need for a strong dollar, in contrast to suggestions by China and others that the world moves to an alternative reserve currency.
US President Barack Obama will arrive in Singapore on November 14, after meeting Japanese PM Yukio Hatoyama in Tokyo. He will be joined in Singapore by Chinese counterpart Hu Jintao, and by Hatoyama. Obama then flies to China for face-to-face meetings with the Communist rulers in Beijing.
With Apec economies representing more than 40 percent of global trade, free trade was another key issue at today’s meetings.
“We are committed to supporting free and open trade and investment to advance Asia-Pacific and global prosperity and growth sustainability and will actively resist protectionist measures,” the ministers said.
Some Apec states, such as Singapore, are backing proposals to create a vast Apec free trade zone. But the bloc is already falling behind on some pre-existing trade targets.
Members meeting in Indonesia in 1994 signed the Bogor Declaration, pledging to create free trade in the group’s developed economies by 2010 and in its emerging economies by 2020.
It remains to be seen what commitment the Obama administration will give on trade, given the pressure exerted by powerful labor constituencies on the Democrats.
Japanese Foreign Ministry spokesman Kazuo Kodama said it is unlikely that Apec will meet the Bogor goals.
“Economic growth must be inclusive,” Kodama said, meaning that Apec countries need to build up social welfare and spending toward Western levels to help ensure that domestic spending in Asia can replace reliance on exports to the US and Europe as a key driver in Asian economies.
Singapore Finance Minister reaffirmed this, saying that “there needs to be structural economic reforms away from a US-focused model.”
Geithner acknowledged that the US retains a “special responsibility,” but added “there are things we cannot do alone.”
However, most analysts agree that Asia will remain reliant on exports to the West for growth in the immediate term while countries wean themselves off the massive stimulus packages which softened the impact of the 2008 crisis.
Restructuring Asian economies toward a European-style welfare/social model is likely to take some time, and will require many years of sustained political and economic investment.
Undeterred by lagging timetables and lofty goals elsewhere, APEC Ministers today agreed on goals “to make it 25 percent cheaper, faster and easier to do business in the region by 2015, with an interim target of 5 percent improvement by 2011.”
This project will address five priority areas identified by the business community, namely: Starting a Business, Getting Credit, Enforcing Contracts, Trading Across Borders and Dealing with Permits.
These criteria are among those scrutinized by the World Bank in its annual Doing Business survey, which ranks countries in terms of ease of starting and doing business.
The most recent survey published in September 2009 put Singapore at the top of the list.
