BEIJING: The global economic recovery is beset by “downside risks,” China’s vice-premier told Asia-Pacific finance ministers on Wednesday, a day after growth in the world’s second-largest economy hit a five-year low.
The meeting in Beijing of ministers from the Asia-Pacific Economic Cooperation (APEC) forum precedes the group’s annual summit next month, when Chinese President Xi Jinping 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,” China’s Vice-Premier Zhang Gaoli said in a speech formally starting the finance meeting.
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.
His comments came a day after China, a major driver of global growth, said gross domestic product expanded 7.3 percent in the third quarter, its slowest pace since the depths of the worldwide downturn.
APEC, established in 1989, groups 21 economies spanning Asia, Oceania and North and South America and includes the United States, China, Japan and Russia, emerging economies such as Mexico and Indonesia and small nations such as Brunei and Papua New Guinea.
“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, the global and regional economy, infrastructure investment and financing cooperation, and fiscal and taxation policy.
The gathering attended by Chinese finance minister Lou Jiwei, Japan’s Taro Aso and others, though US Treasury Secretary Jacob Lew skipped the event, instead sending Deputy Secretary Sarah Bloom Raskin.
Sri Mulyani Indrawati, managing director of the World Bank, warned the meeting 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 group and the conflict in Ukraine.
“The picture has changed, and 2014 could turn out to be a disappointing year for the global economy,” she 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.”
‘A new world’
Over its quarter-century history APEC, which is a consensus-based grouping, long sought free trade among its members and now says its main objective “is to support sustainable economic growth and prosperity in the Asia-Pacific region.”
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,” he told AFP on the meeting’s sidelines.
Longer term structural issues were 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,” he said.
Free trade remains a key APEC goal, though rival groupings championed by the US and China have split members.
Politically, tensions within the organization include maritime territorial disputes between China, the Philippines and Vietnam as well as between China and Japan.
APEC also includes Hong Kong, a semi-autonomous region of China, and self-governing Taiwan, which is claimed by Beijing.
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 city’s chief executive in 2017. AFP