Sliding Japan economy ratchets up pressure at APEC

Sliding Japan economy ratchets up pressure at APEC

SUZHOU, China (Reuters): Top Asia-Pacific officials struggling to send a strong policy signal to global markets were dealt another blow on Friday as data confirmed Japan's economy -- already a drag on the region -- was still floundering.

APEC deputy finance ministers and central bankers are holding talks in the eastern Chinese city of Suzhou to hammer out an agenda for a weekend meeting of finance ministers which they hope will produce tools to combat the slump in the global economy.

The mood of the Asia Pacific Economic Cooperation financial forum has been dampened by the sluggish U.S. economy and global high-tech slump which have crimped Asian exports, driving Singapore into recession and Hong Kong and Japan to its brink.

"It would be a lie if we said sentiment was good," said one Asian delegate.

The one bright spot at the APEC forum on Friday could turn out to be a bilateral meeting on the sidelines of the event between Chinese Finance Minister Xiang Huaicheng and his Taiwan counterpart Yen Ching-Chang.

That meeting, scheduled for 6 p.m. (5 p.m. Jakarta time), would be the highest level contact between the two political rivals since a key government advisory panel in Taipei called last month for a decades-old ban on direct trade links to be dropped.

Taiwan's foreign minister, however, has played down the meeting as a matter of APEC protocol.

Deputies were expected to wind up talks by midday on a draft declaration for finance ministers that China's Vice Finance Minister Jin Liqun, chairing the meeting, has said would "give a very strong signal to international markets".

"Overall, I can say the ministerial statement would reflect the concerted efforts and the consensus by ministers to help promote regional growth and development," Jin told reporters.

In addition to the global slump, the talks have focused on corporate governance, the development of Asian debt markets, electronic finance and a report calling for better transparency from credit rating agencies.

The last was put forward by a committee chaired by the Philippines which has studied rating agencies and their methodologies since the 1997 economic crisis saw some Asian ratings plunge and caused volatile swings in capital flows.

The aim was not to ask agencies to upgrade any APEC economy, but for them to make clear how they evaluate economies and companies and what weightings different factors get, so investors can use the ratings better, said an Asian delegate.

The 21 economies span the spectrum from the world's biggest economies in the United States and Japan to crisis-ridden Indonesia and impoverished Papua New Guinea. South American economies are suffering from Argentina's debt crisis.

Analysts are skeptical the diverse grouping can overcome its differences, especially in the face of dire economic conditions. Tokyo's latest growth data -- labeled as severe by Finance Minister Masajuro Shiokawa -- simply added to their burden.