The heads of the mega economic countries of the world took the route back to their homes after attending the summits for four days. It ended from where it had started – did not get any close to any viable agreement about the problem of balancing the world economy and warding off potential new crises.
There were two summits – one following the other. The first one was attended by the G-20 representatives of the advanced as well as the emerging economies in Seoul. This was followed during the weekend by a gathering at Yokohama where the marked differences between USA and China on the economic front came out in the open. Currently after USA, China is the second biggest economic power.
The President of USA failed to make much progress in his endeavours to convince his Chinese counterpart Hu Jintao to bring about more structural changes in the Chinese economy so that USA could export more goods to that country. Beijing thinks that dramatic adjustments would hamper the growth pace of its economy.
Speaking to the leaders Hu said, “Advanced economies have to cope with serious unemployment problems, while emerging market economies are confronted with asset price bubbles and inflationary pressure”. He was speaking at the Japanese port city of Yokohama to 21 member countries of APEC (Asia-Pacific Economic Cooperation.
The meeting however did give the nod on plans for setting up a free trade region linking the fastest growing region of the world. Competitive devaluations would not be resorted to while exports would help them towards economic recovery.
But in the middle of this display of bonhomie Hue struck a serious note. He remarked on the noticeable increase in protectionism – this being a serious threat to regions that heavily relies on trade for sustenance.
The central outcome of the APEC meeting was the plan for taking concrete steps towards Free Trade Area linking USA, China and Japan – the three largest economies of the world. The fast growing emerging countries in Asia and Latin America would also be linked to the chain.
The APEC meeting took place soon after the summit of G-20. At the latter gathering the agreement had been ambiguous with a marked lack of unity. The problem of trade imbalances, particularly between USA and China remained unresolved although this was the most important factor in contributing to the destabilizing of the economy of the world.