Barack Obama will tell Asian leaders that global prosperity needs a balanced approach to growth that relies less on debt-fuelled consumption.
On his first tour of Asia since taking office, President Obama will be attending a series of summits that begin in Tokyo on Friday and take in Beijing and Seoul next week. The tour will also include a weekend stop in Singapore for the meeting of leaders of the Asia-Pacific Economic Co-operation (Apec), a talking shop where Timothy Geithner, the Treasury Secretary, acknowledged yesterday that Asia was leading the world back to growth.
But as that process unfolds, said Mr Geithner, a strong dollar remains key to global stability. His comments followed a summit meeting of finance ministers from across the Asia-Pacific region, at which delegates discussed the need for more flexible exchange rates, as well as strategies for weaning themselves off stimulus measures that have left many governments buckling under rising public debt.
Stimulus exit strategies, said Mr Geithner, would be timed according to each country’s needs, but the underlying task was to restore confidence. “The challenge is growth. First growth, but make sure we have business confidence restored, investments expanding again, unemployment coming down, financial sector definitively repaired — that’s our basic challenge.”
In an unexpected policy shift, Apec finance ministers also agreed to discuss the abolition of all trade restrictions on food, a move whose impact would be particularly dramatic for the trade in rice. Many Asian leaders were badly rattled by last year’s foodshortage crisis — a phase during which rice prices rocketed over the space of a few days, several nations banned exports and rioting broke out in some places.
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Japan and Korea are among Asian countries deliberately restricting the flows of rice to ensure their farmers do not face competition from cheaper imports. Apec delegates vowed to “actively resist” protectionism.
Robert Prior-Wandesforde, an economist at HSBC, said the idea was very worthy, but unlikely to be put into practice as long as it was seen to benefit some nations more than others. The food crisis, he added, clearly demonstrated how quickly governments are prepared to turn protectionist.
The Apec forum declared itself to be set in the shadow of the biggest financial crisis since the Second World War. Reducing public sector debt will take more than “the mere phasing out of stimulus measures — it will need lower budget deficits and reforms that support economic growth”, a statement from the ministers read.