US and China stick to guns on global balancing at APEC

U.S. President Barack Obama warned countries such as China against relying too much on exports for growth, and Chinese President Hu Jintao reiterated Beijing's commitment to a gradual reform of its exchange rate regime.

“One of the important lessons the economic crisis taught us is the limits of depending primarily on American consumers and Asian exports to drive economic growth,” Obama told a forum of Asia-Pacific business leaders.

“Going forward, no nation should assume that their path to prosperity is simply paved with exports to America,” he said on the final leg of a 10-day tour that has also taken him to India, Indonesia and South Korea.

The United States and China blame each other for doing more damage to international trade. Washington contends the yuan is undervalued, giving it an export advantage, while Beijing argues the U.S. Federal Reserve's easy-money policy is aimed at weakening the dollar to boost exports.

Hu, taking the podium shortly after Obama, told the business executives China wanted to expand domestic demand growth, and remained committed to reforming its exchange rate “on the basis of retaining initiative, controllability and gradualness.”

“China will continue encouraging a balanced international balance of payments an important task in ensuring macroeconomic stability,” Hu said.

Obama's national security adviser, Tom Donilon, later told a news briefing China needed to show progress on reforming the exchange rate by the time Hu visits Washington in January.

“President Hu Jintao's visit in January would be an important time to look at exactly what the quantum of progress has been on this,” Donilon said.

“The United States ... would like to see China proceed apace on these reforms, because it's important, we think, to China, but it's important to the world in terms of a stable economic path forward.”

Obama and Hu joined other leaders of the Asia-Pacific Economic Cooperation (APEC) group for a weekend summit that is focusing on policies to ensure balanced growth and taking concrete steps toward setting up a vast free-trade area in the world's fastest-growing economic region.

Sovereign Debt Risks

The APEC leaders agreed after a first round of talks the world economy was improving but still fragile, a Japanese government official said. Sovereign debt problems remain a risk, while unemployment and the financial sector continue to be of concern, the official said.

The G-20 countries are trying to find ways of bringing down overly large current account surpluses and deficits among major economies. The group's leaders agreed in Seoul to set “indicative guidelines” for imbalances, but offered investors little proof that the world was any safer from economic catastrophes.

APEC is for the first time championing a collective growth strategy, emphasizing balanced and sustainable growth, an elusive goal when the global economy is split between cash-rich exporters and debt-burdened importers.

The leaders will pledge to take steps to create a vast Free Trade Area of the Asia-Pacific (FTAAP) in the region, home to 40 percent of the world's population and 53 percent of global economic output, by building on existing pacts.

(Related stories on page 5)

Subscribe to The China Post and save 25%. Click here

PrintEmail

Write a Comment

Terms

Enter your comments - 3000 characters max

Type in image code

Submit

 Receive China Post promos
 Respond to this email