YOKOHAMA, Japan (Reuters) – US President Barack Obama called for surplus economies such as China to end reliance on exports for growth, but his Chinese counterpart cautioned that economic policy change would come gradually.
Obama and Chinese President Hu Jintao spoke to Asia-Pacific business executives a day after a summit in Seoul of the Group of 20 major economies managed only vague commitments to keep a fragile global economic recovery on track.
They then joined other leaders of the Asia-Pacific Economic Coopera-tion (APEC) group for a weekend of talks on policies to ensure balanced growth and the establishment of a vast free trade area in the world’s fastest growing economic region.
“One of the important lessons the economic crisis taught us is the limits of depending primarily on American consumers and Asian exports to drive economic growth,” Obama said.
“Going forward, no nation should assume that their path to prosperity is simply paved with exports to America,” he said on the final leg of a 10-day tour that has also taken him to India, Indonesia and South Korea. The United States and China have been fussing over who is doing more damage to international trade. Washington contends the yuan is undervalued, giving it an export advantage, while Beijing argues the US Federal Reserve’s easy-money policy is aimed at weakening the dollar to boost exports.
Hu, taking the podium shortly after Obama, told the business forum China wanted to expand domestic demand growth and remained committed to reforming its exchange rate “on the basis of retaining initiative, controllability and gradualness”.
“China will continue making encouraging a balanced international balance of payments an important task in ensuring macro-economic stability,” Hu said.
The G20 countries are trying to find ways of bringing down overly large current account surpluses and deficits among major economies to head off potentially destructive protectionism.
Hanging over the summit as well are acrimonious disputes between host Japan and both China and Russia over neighbouring islands.
Hu barely smiled when he shook hands with Japanese Prime Minister Naoto Kan as he welcomed APEC leaders to a lunch ahead of the start of their summit.
Later, the Japanese government announced that Hu and Kan had met for 22 minutes, the first formal chat between the two leaders since the territorial row erupted in September.
Relations between Asia’s two biggest economies have been soured by the dispute over isles in the East China Sea near potentially vast oil and gas reserves. Public anger has been fuelled by the recent leaking of a video that shows a Chinese fishing boat appearing to steer into Japanese patrol vessels.
Thousands of Japanese took to the streets yesterday to protest what they see as an imperialistic China in Yokohama, a port city known for having Japan’s biggest Chinatown, with anti-globalisation activists, helmeted left-wing students, and other nationalist groups also marching.
