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APEC ministers plot ways to sustain recovery
Officials said short-term sacrifices were needed for lasting improvements.
“Fixing the economic situation today is like going to the dentist,” Chile’s vice finance minister, Maria Olivia Recart, said. “It hurts a lot, but you know you are investing in the future.”
The weeklong forum culminates in a leaders’ summit Saturday and Sunday that includes President Barack Obama, Chinese President Hu Jintao and Japanese Prime Minister Yukio Hatoyama, among others from Pacific Rim nations.
“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,” US Treasury Secretary Tim Geithner told reporters.
But ensuring growth and stability as nations begin withdrawing stimulus packages are key challenges that face the world economy after the crisis subsides, he and fellow finance ministers said in a joint statement Thursday. Reducing public sector debt will need more than “the mere phasing out of stimulus measures” and will require lower budget deficits and reforms that support economic growth, they said.
Geithner said there was strong consensus at APEC on the importance of ensuring that “we lay the foundations for a strong, more balanced recovery.” Global imbalances between countries in trade, currencies, spending and saving habits have been blamed for much of the severity of this year’s world economic crisis.
The ministers agreed to “undertake monetary policies” based on flexible exchange rates -- a statement that reflects concerns over China’s restrictions on its currency, the yuan, despite repeated pledges by Beijing to move toward market-based exchange rates.
European and other Asian exporters have been pressured by the yuan’s effective peg against a weakening U.S. dollar, which makes Chinese exports relatively cheaper, and thus more competitive overseas.
”It is very important for the US that we have a strong dollar, that we sustain confidence in our financial system,” Geithner said. The ministers’ statement also called for freer trade and warned against resorting to protectionism.
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