HONOLULU (Reuters) - Asia-Pacific CEOs will press world leaders on Friday to boost growth and seal a regional trade deal, goals made more urgent by the European debt crisis that has darkened global economic growth prospects.
Business leaders advising the Asia-Pacific Economic Cooperation (APEC) summit said a “volatile and uncertain economic environment” was discouraging private-sector investment and could spawn protectionist sentiment.
In a letter to U.S. President Barack Obama, who arrives for the Honolulu talks late on Friday, CEOs called on governments “to liaise closely with business as we work together to stimulate economic growth and create jobs in the short term, and work toward balanced growth in the long term.”
With Europe in danger of slipping into a recession and U.S. growth sluggish, Asia represents the best bet for keeping the world economy on track.
Senior officials drafting an APEC communique reached consensus on the need for all member economies to bolster themselves against the potential spillover from Europe.
But there was no sign the summit of countries that account for more than half of global economic output would offer any concrete measures to help the euro-zone cope with its crisis.
APEC leaders, who meet on the weekend, were also expected to keep the heat on China over what many see as an artificially undervalued yuan that hurts competitors like the United States.
The issue has been a major irritant between Washington and Beijing, which has become increasingly assertive in a region where Obama now wants to refocus U.S. attention.
Friday’s agenda includes executives from Caterpillar, General Electric and Wal-Mart, as well as Australian Prime Minister Julia Gillard and Singapore’s Lee Hsien Loong.
A regional trade deal known as the Transpacific Partnership was high on the list of priorities for business executives, and they urged leaders to sign the agreement by the middle of 2012.
Nine countries — the United States, Australia, New Zealand, Vietnam, Malaysia, Singapore, Brunei, Chile and Peru — are expected to say on Saturday they have reached the broad outlines of a deal. Japan may also join, giving the pact greater heft.
But even if a deal is reached, it would not address the immediate problem of sustaining global growth should Europe’s debt situation deteriorate further.
U.S. Treasury Secretary Timothy Geithner urged APEC countries to do whatever they could to boost growth in order to cushion the global economic blow from Europe.
Unlike the United States, where the Federal Reserve has already lowered interest rates to near zero, many Asian countries still have room to reduce official borrowing costs to try to bolster growth.
In addition, China, South Korea and other Asian economies hold more than $4 trillion in foreign reserves, giving them financial firepower to boost government spending.
“There’s a very strong rationale for economies that have the capacity to do it to act now to strengthen growth,” Geithner said.
China said it would take steps to support growth but appeared to rule out a rapid rise of its yuan, saying it would pursue a stable policy on its currency.
“The Chinese government will continue to adopt a proactive financial policy and stable currency policy,” China’s Vice Finance Minister Wang Jun said at a meeting of the region’s finance ministers, according to the Xinhua news agency.
China would “accelerate the transformation of the mode of economic development, strive to build a long-term and effective mechanism to broaden domestic demand, and boost consumption, while continuing to stabilize and expand external demand, and actively expand imports”, he said.
Editing by Robert Birsel