Asia-Pacific finance ministers endorsed “market-oriented” exchange rates yesterday and said they would stick with economic stimulus plans until a sustained economic recovery was under way.
US Treasury Secretary Timothy Geithner said the timing of stimulus exit policies would vary between countries, but business confidence and the financial system must be restored first.
“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,” Geithner said in Singapore after a meeting of Pacific rim finance ministers.
PHOTO: AFP WARNING: EXCESSIVE CONSUMPTION OF ALCOHOL CAN DAMAGE
The ministers of the 21-member APEC discussed strengthening the post-crisis global economy to prevent asset bubbles and excess leverage with prudent macroeconomic and regulatory policies.
In a statement they agreed to “undertake monetary policies consistent with price stability in the context of market-oriented exchange rates that reflect underlying economic fundamentals”.
The group includes China, which has effectively pegged its currency against the dollar since the middle of last year to help fend off the global downturn.
However, export-reliant Asian nations are crying foul over the yuan’s state-sanctioned rigidity, which makes them less competitive, and the issue has been a hot topic at the APEC talks this week.
Singaporean Finance Minister Tharman Shanmugaratnam sidestepped a question over the level of the yuan, which China has been accused of keeping artificially low in order to boost its exports.
In a veiled reference to the Chinese currency, he said that APEC finance ministers did not advocate any sudden shift in its value.
“None of us around the table were calling for, or thought it advisable to have, any sudden significant realignment of exchange rates,” he said at a joint press conference after the ministerial talks.
“It’s not a silver bullet for solving either the question of domestic demand or towards achieving balanced and sustainable growth,” he said.
“But we do see flexible exchange rates as being part of the overall milieu of options that all our economies must use, together with structural reforms, together with other economic reforms.”
Other APEC economies aside from China manage their currencies to some degree, including Singapore, Malaysia and Vietnam.
US President Barack Obama said in an interview this week that he would raise the currency issue on a visit to China next week. His administration says an undervalued yuan is one factor contributing to economic imbalances between the first and third-biggest economies in the world.
China’s central bank said on Wednesday it would consider major currencies in guiding the yuan, suggesting a departure from the effective dollar peg.
“I’d say that ... is the most significant news we’ve had on the yuan for months, and that APEC is more of a formal reminder from China’s closest neighbors, not just the US and Europe, that forex rigidity in a huge trading economy is not a domestic issue,” Westpac Banking Corp strategist Sean Callow said.
Emergency measures put in place by APEC member governments, including some US$1 trillion in Asia alone and US$787 billion in the US, prevented a deeper recession, Geithner said.
However, Australian Treasurer Wayne Swan told reporters before going into the APEC meeting: “What we have to do is to make sure that we don’t withdraw global support too early.”
“In Australia’s case, our economic stimulus peaked in the middle of this year and is being gradually withdrawn as we go through the rest of the year,” Swan said.
WTO Director General Pascal Lamy cautioned of a false dawn in the recovery.
“There’s certainly a recovery happening, certainly in this region, which has suffered less from the crisis than from other regions of the planet,” he told CNBC in an interview on the APEC sidelines. “But I would be prudent whether or not this would be sustainable six months or a year from now.”
He said rising unemployment was the main threat to free trade and could spark greater protectionist policies around the globe.
APEC’s trade and foreign ministers pledged to refrain from raising new barriers to trade and investment, and said a review of measures taken by member economies that began last July to ensure they were not protectionist would continue into next year.
SECURITY: As China is ‘reshaping’ Hong Kong’s population, Taiwan must raise the eligibility threshold for applications from Hong Kongers, Chiu Chui-cheng said When Hong Kong and Macau citizens apply for residency in Taiwan, it would be under a new category that includes a “national security observation period,” Mainland Affairs Council (MAC) Minister Chiu Chui-cheng (邱垂正) said yesterday. President William Lai (賴清德) on March 13 announced 17 strategies to counter China’s aggression toward Taiwan, including incorporating national security considerations into the review process for residency applications from Hong Kong and Macau citizens. The situation in Hong Kong is constantly changing, Chiu said to media yesterday on the sidelines of the Taipei Technology Run hosted by the Taipei Neihu Technology Park Development Association. With
CARROT AND STICK: While unrelenting in its military threats, China attracted nearly 40,000 Taiwanese to over 400 business events last year Nearly 40,000 Taiwanese last year joined industry events in China, such as conferences and trade fairs, supported by the Chinese government, a study showed yesterday, as Beijing ramps up a charm offensive toward Taipei alongside military pressure. China has long taken a carrot-and-stick approach to Taiwan, threatening it with the prospect of military action while reaching out to those it believes are amenable to Beijing’s point of view. Taiwanese security officials are wary of what they see as Beijing’s influence campaigns to sway public opinion after Taipei and Beijing gradually resumed travel links halted by the COVID-19 pandemic, but the scale of
A US Marine Corps regiment equipped with Naval Strike Missiles (NSM) is set to participate in the upcoming Balikatan 25 exercise in the Luzon Strait, marking the system’s first-ever deployment in the Philippines. US and Philippine officials have separately confirmed that the Navy Marine Expeditionary Ship Interdiction System (NMESIS) — the mobile launch platform for the Naval Strike Missile — would take part in the joint exercise. The missiles are being deployed to “a strategic first island chain chokepoint” in the waters between Taiwan proper and the Philippines, US-based Naval News reported. “The Luzon Strait and Bashi Channel represent a critical access
Pope Francis is be laid to rest on Saturday after lying in state for three days in St Peter’s Basilica, where the faithful are expected to flock to pay their respects to history’s first Latin American pontiff. The cardinals met yesterday in the Vatican’s synod hall to chart the next steps before a conclave begins to choose Francis’ successor, as condolences poured in from around the world. According to current norms, the conclave must begin between May 5 and 10. The cardinals set the funeral for Saturday at 10am in St Peter’s Square, to be celebrated by the dean of the College
RSS