APEC finance chiefs see 'downside risks' to global economy

Kelly Olsen
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Chinese Vice Premier Zhang Gaoli (L) speaks during the opening ceremony of the Asia-Pacific Economic Cooperation (APEC) Finance Ministers's Meeting in Beijing on October 22, 2014

Chinese Vice Premier Zhang Gaoli (L) speaks during the opening ceremony of the Asia-Pacific Economic Cooperation (APEC) Finance Ministers's Meeting in Beijing on October 22, 2014 (AFP Photo/Wang Zhao)

The global economy is beset by increasing "downside risks", Asia-Pacific finance chiefs said Wednesday, a day after growth in China hit a five-year low.

The meeting in Beijing of finance ministers from the Asia-Pacific Economic Cooperation (APEC) forum preceded the group's annual summit next month, when Chinese President Xi Jinping will host leaders from the US, Russia and Japan amongst others.

"As the global economy still faces persistent weakness in demand, growth is uneven and remains below the pace necessary to generate needed jobs, and downside risks have risen," the ministers said in a joint statement.

"The APEC region, as the engine of the world economy, should lead the global recovery towards strong, sustainable and balanced growth."

The statement came after China, the world's second-largest economy, said Tuesday that gross domestic product expanded 7.3 percent in the third quarter, its slowest pace since the depths of the 2008-2009 global financial crisis.

APEC, established in 1989, groups 21 economies spanning Asia, Oceania and North and South America. It 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.

Chinese Vice Premier Zhang Gaoli opened the meeting by highlighting challenges the region faced, but stressed the importance of APEC's economies which he said account for 40 percent of the world's population, 70 percent of the global economy and 46 percent of world trade.

The gathering was 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.

World Bank managing director Sri Mulyani Indrawati warned the meeting of global risks including weakening commodity prices, the Ebola outbreak in West Africa and political instability characterised by the rise of the Islamic State group and ongoing conflict in Ukraine.

"2014 could turn out to be a disappointing year for the global economy," she said.

China's Lou played down his country's slowing growth, telling a post-meeting press conference that "singlehandedly" focusing on GDP expansion is insufficient.

"We should pay great attention to the quality of growth. Indeed, the quality is improving," he said.

- 'A new world' -

Alan Bollard, APEC executive director and former head of New Zealand's central bank, said both near- and medium-range challenges were on APEC's agenda.

"The general theme on the short-term monitoring side is very much how normalisation of monetary policy in the US goes and what positive or negative spillovers there could be," he told AFP on the meeting's sidelines, referring to the US Federal Reserve winding down a vast bond-buying programme put in place to help fight the global financial crisis.

Longer-term structural issues were also important, he added.

"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.

Political tensions within the organisation include maritime territorial disputes between China, the Philippines and Vietnam as well as between China and Japan, whose leaders have not yet held direct talks.

Japan's Aso, who is also deputy prime minister, told his country's media in Beijing that during a brief chat with Vice-Premier Zhang he urged China to allow a summit between Xi and Japanese Prime Minister Shinzo Abe next month at APEC.

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.