The global economic recovery is beset by “downside risks,” Chinese Vice Premier Zhang Gaoli (張高麗) told Asia-Pacific finance ministers yesterday, a day after growth in the world’s second-largest economy hit a five-year low.
The meeting in Beijing of ministers from the APEC forum precedes the group’s annual summit next month, when Chinese President Xi Jinping (習近平) is to host counterparts including US President Barack Obama, Russian President Vladimir Putin and Japanese Prime Minister Shinzo Abe.
“Now global economic recovery remains difficult, with downside risks still existing,” Zhang said in a speech formally starting the finance meeting.
Photo: AFP
The Asia-Pacific faced challenges including what he described as “policy adjustment of major developed economies,” apparently a reference to the US Federal Reserve winding down its vast bond-buying program put in place to help fight the global financial crisis.
“The Asia-Pacific region is the main driving force and engine for global economic growth,” Zhang said, stressing that the group’s economies account for 40 percent of the world’s population, 70 percent of the global economy and 46 percent of world trade.
Zhang said ministers would be discussing, among other issues, global and regional economy, infrastructure investment and financing cooperation, and fiscal and taxation policy.
The gathering was attended by Chinese Minister of Finance Lou Jiwei (樓繼偉), Japanese Minister of Finance Taro Aso and others, though US Secretary of the Treasury Jack Lew skipped the event, instead sending US Deputy Secretary of the Treasury Sarah Bloom Raskin.
World Bank managing director Sri Mulyani Indrawati warned attendees of wider global risks, including weakening commodity prices, the Ebola outbreak in west Africa and political instability, characterized by the rise of the Islamic State and the conflict in Ukraine.
“The picture has changed, and 2014 could turn out to be a disappointing year for the global economy,” Indrawati said.
“Global growth has been revised downwards and is now expected at 2.6 percent this year, only marginally up from 2.4 percent in 2013,” she added, highlighting “a systematic underestimation of global headwinds and inadequacies of policy responses.”
Alan Bollard, APEC executive director and former head of New Zealand’s central bank, said both near and medium-range challenges were on the agenda.
“The general theme on the short-term monitoring side is very much how normalization of monetary policy in the US goes and what positive or negative spillovers there could be,” Bollard told reporters on the sidelines of the meeting.
Longer-term structural issues are also important, he added.
“It is a new world,” he said, describing how officials must grapple with the challenge of slower economic expansion. “We’ve relied on trade-driven growth in the past for APEC and it’s not going to be like that for the future.”
The finance meeting was originally slated to be held in Hong Kong, but the venue was switched early this year, reportedly over Chinese concerns about the prospect of pro-democracy demonstrations in the former British colony.
Since late last month, Hong Kong has been the scene of major street protests by groups demanding fully democratic elections for the territory’s chief executive in 2017.
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