APEC leaders seek firewall against Europe crisis

by lexie Sun Nov 13, 2011 5:54 pm

Nov 13, 2011 16:32 EST

APEC leaders seek firewall against Europe crisis

HONOLULU (Reuters) - Asia-Pacific leaders sought a united front on Sunday to prop up economic growth despite divisions over trade and currency policies as they face a common threat from Europe's debt crisis.

Fresh from a rare success over agreement on the outlines of a regional trade deal, the 21 nations at the Asia-Pacific Economic Cooperation summit looked to the immediate challenge of safeguarding themselves against the fallout from Europe.

President Barack Obama, seeking to reassert U.S. leadership to counter China's expanding influence around the Pacific Rim, opened talks with APEC leaders declaring the region was "absolutely critical" to America's prosperity.

But he insisted Asia-Pacific economies must address "imbalances" and promote "balanced and sustainable growth," alluding to U.S. concerns about a huge trade deficit with China's export-driven economy.

"It's time to get down to work," Obama told leaders gathered in his native city of Honolulu. "Nearly 3 billion citizens (are) looking to us to bring our economies closer, to increase exports, to expand trade and opportunities that creates jobs and economic growth."

By harnessing the potential for expanded trade with Asia-Pacific countries -- the world's fastest-growing region -- Obama hopes he can create U.S. jobs to help him through a tough re-election fight in 2012.

"We are not going to be able to put our folks back to work and grow our economy and expand opportunity unless the Asia-Pacific region is also successful," he said.

But the outlook for the region, which accounts for more than half of the world's economic output, remains clouded by the threat of contagion from Europe's fiscal turmoil.

After talks on Sunday, leaders were expected to release a statement expressing concern that Europe's unresolved debt troubles will spill over into the Asia-Pacific region and committing themselves to bolster their defenses.

International Monetary Fund chief Christine Lagarde, who has warned that strains from the euro zone could hurt Asia, attended the Honolulu summit to consult with the leaders.

ASIAN ENGINE SLOWING

Unlike the United States, where the Federal Reserve has already cut interest rates to near zero, many Asian economies have room to reduce benchmark borrowing costs to try to spur faster growth. Most of them also boast healthy public finances, giving them more leeway to boost government spending.

"If we can at least contain the (European) crisis then one of the great opportunities we have is to see the Asia-Pacific region as an extraordinary engine for growth," Obama said on Saturday.

But that engine is slowing down and inflation-wary Asian leaders do not necessarily want to rev it back up. China is reluctant to unleash another huge stimulus package like the one it launched in 2009 because of concern over wasteful spending.

China's economic growth will likely dip below 9 percent next year for the first time in a decade. That would still be four times faster than the U.S. economy is likely to grow.

Although leaders will put on a show of unity, the APEC summit revealed some growing rifts, particularly between the two biggest players -- the United States and China.

A senior White House official said Obama cautioned China's President Hu Jintao that Americans were growing increasingly impatient and frustrated with the pace of change in China's economic policy.

The two leaders met on Saturday and White House spokesman Jay Carney said Obama was "very direct" with Hu about currency and trade issues during their meeting.

The United States has long complained China keeps its currency, the yuan, artificially weak to give its exporters an advantage. China counters the yuan should rise only gradually to avoid harming the economy and driving up unemployment, which would hurt global growth.

Hu was quoted by Chinanews.com in Beijing on Sunday as saying a big appreciation in the yuan against the dollar would not help solve U.S. woes.

"The trade deficit and unemployment problems are not caused by the yuan exchange rate. Even a major appreciation of the yuan would not resolve the problems facing the United States," Hu said in comments echoed by China's foreign ministry.

Source: Reuters US Online Report World News

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by Guest Sun Nov 13, 2011 7:09 pm

Thanks for the Post lexi. AJ

APEC leaders seek firewall against Europe crisis

APEC leaders seek firewall against Europe crisis

Re: APEC leaders seek firewall against Europe crisis