Asia Pacific finance ministers, grappling with a global slowdown and wide divisions over how to deal with it, gather this week in one of the few countries managing to thrive despite the slump -- China.
Deputy ministers and central bankers from the Asia Pacific Economic Cooperation (APEC) forum kick off two days of talks in the city of Suzhou today, with finance ministers meeting on Saturday and Sunday.
The gloom hanging over the meeting is a stark contrast to the early days of APEC a decade ago, when participants believed they were witnessing the dawn of a "Pacific century" of startling economic growth that would eclipse the rest of the world.
PHOTO: REUTERS
That optimism is long gone, strangled by the brutal economic crisis that hit southeast Asia in 1997, financial turbulence in South America, deep-seated problems in Japan and the sharp slowdown in the US and the global technology sector.
Many analysts are sceptical whether the diverse, 21-member APEC, whose members range from industrial giants like the US and Japan to crisis-ridden Indonesia and impoverished Papua New Guinea, can come up with any common initiatives to stop the rot.
When APEC finance ministers gathered last year in Brunei, Asia's recovery from crisis seemed comfortably on track.
No more.
The US economic slowdown and slumping exports have weighed on Asia. Singapore slipped into recession in the first half, Japan and Hong Kong teeter on the edge and Taiwan has suffered its first contraction in 26 years. South America, meanwhile, has been shaken by Argentina's debt troubles.
"Overall we do not see a quick turnaround," said Mignon Chan, director-general of the Pacific Economic Cooperation Council, which advises APEC.
"Japan's economy is one of the key areas. Also the US and Asian markets are mutually reinforcing ... So unless the US economy improves, it's difficult to see a short-term turnaround."
Japan stole the limelight at the Langkawi APEC finance ministers' meeting two years ago by unveiling details of the so-called Miyazawa Plan to bolster struggling Asian economies.
This year, no such initiatives are expected. The most other APEC members are hoping to get from Japan is commitment to more wide-ranging reforms to tackle its chronic economic malaise.
US Treasury Secretary Paul O'Neill is also expected to face demands for measures to kick start the US economy.
The recent weakening of the dollar is a particular concern for countries which have already seen their exports badly hit.
Japanese Finance Minister Masajuro Shiokawa says he plans to ask O'Neill to clarify Washington's position on the dollar when they meet in Suzhou.
Some analysts are speculating there could be concerted G7 intervention to boost dollar-yen.
Mansoor Mohi-uddin, currency strategist at UBS Warburg, said Japan and other nations would be looking for US reassurance that Washington had not quietly dropped its strong dollar policy.
"The market has an implicit concern that the US is trying to abandon the strong dollar policy without actually saying so. Obviously, if that's the case, then the Americans would be less keen to intervene to weaken the yen against the dollar," he said.
Host nation China has weathered the economic storms better than most -- it grew 7.9 percent year-on-year in the first half. Its increasing clout in APEC is underscored by its looming accession to the WTO, expected by early next year at the latest.
"Within APEC, China is already playing quite a dominant role," Chan said. "China is less vulnerable in the sense that they really haven't linked into the global markets yet. Once they have, they will be more susceptible to the external environment."
Other Asian economies are increasingly concerned they will slip off the radar screen as China's dominance increases.
Chan said criticism that APEC was all talk and no action was misplaced. At the working-group level good progress was made every year and the annual informal gathering of APEC leaders was also extremely useful, he said.
This year's APEC leaders summit -- at which Chinese President Jiang Zemin will meet US President George W. Bush for the first time -- is in Shanghai in October.
"The big stride in APEC is the informal leaders' meeting. Every year these 21 member economies' leaders are able to discuss their issues and concerns in a very personal manner. I think that is a tremendous benefit although quite a lot of the discussion may not hit the media spotlight," Chan said.
"So I do see the value of APEC. That said, it needs stronger concerted political will to resolve some of these issues."
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