APEC finance ministers pledge to coordinate economic policies to confront risks

Finance ministers of the Asia-Pacific Economic Cooperation (APEC) economies agreed to enhance coordination and communication on macroeconomic policies to confront external risks and challenges that threaten growth and financial stability, at a time when China warned of increasing global unrest due to geopolitical conflicts and their cross-border repercussions.

Chinese Minister of Finance Lan Fuan said, on Wednesday, after the meeting of finance ministers in Hong Kong, that member states agreed to enhance the strength of their macroeconomic policies and strengthen their financial and public financial systems, allowing them to better deal with the state of uncertainty and protect economic and financial stability in the region.

Lan added that the agreement included a range of areas, including financial policies that support families, financing digital infrastructure, expanding access to financial services, and enhancing the exchange of experiences and opportunities for young professionals working in the financial sector.

He stressed that supporting families and investing in individuals could contribute to raising consumer spending, domestic demand, and productivity, but at the same time he stressed the need to maintain financial discipline and ensure the sustainability of public finances.

The Chinese minister noted that artificial intelligence and other emerging technologies can boost productivity and provide new sources of growth, at a time when economies seek to deal with external risks and shifts in the global economic environment.

Lan had warned, during the opening of the finance ministers' meeting on Tuesday, that the international scene was becoming more turbulent and complex, with geopolitical conflicts extending across borders and posing multiple challenges to global economic growth. He called on member economies to intensify dialogue on macroeconomic policies and enhance coordination in communication regarding economic decisions, to limit the negative repercussions that may be transmitted from one economy to another.

He said that the participating economies bear an increasing responsibility in supporting global growth, calling for expanding cooperation in the fields of artificial intelligence, the digital economy and low-carbon development, while maintaining an open economic environment and stable and smooth supply chains.

These warnings come in light of mounting concerns about the repercussions of geopolitical conflicts on economic activity, especially the repercussions of the war in the Middle East on energy markets and inflation. High government bond yields in major economies also increase borrowing costs and exacerbate debt servicing burdens, putting public finances and monetary policies under additional pressure.

In one of the main outcomes of the meeting, a separate statement was issued on financing digital infrastructure in the Asia-Pacific region, aiming to support regional trade, enhance economic interconnection, and expand economic opportunities.

The statement called on member economies to develop reliable, available, scalable, secure and flexible digital infrastructure, improve digital culture and technical skills, enhance compatibility between systems and develop cross-border digital connectivity to accelerate digital transformation in the region.

The statement stressed the importance of deepening cooperation between the public and private sectors and multilateral development banks, with the aim of encouraging innovation and reducing investment risks. He called on governments to create supportive policies and regulatory frameworks, while private companies must provide capital and develop new financing methods, and development banks must help prepare projects and qualify them to attract investments.

This trend reflects the participating economies’ efforts to expand sources of financing for digital infrastructure, and to benefit from private investment and multilateral institutions to support economic interconnection and facilitate trade, at a time when the importance of digital technologies and artificial intelligence in enhancing productivity and growth is increasing.

For his part, Jeffrey Siew, Second Minister of Finance of Singapore, said that global growth faces risks resulting from continuing conflicts, worsening geopolitical fragmentation, and the possibility that productivity gains resulting from artificial intelligence will fall short of expectations.

He added that the APEC Forum can help small and medium-sized companies benefit from artificial intelligence technologies, by bringing together industrial partners, technology providers and training institutions, allowing these companies to access the expertise and tools necessary to adopt new technologies.

In the same context, Lan stressed that the development of the Chinese economy is closely linked to the development of the region's economies, pointing to the ability of the Chinese economy to demonstrate flexibility and vitality despite local and international challenges. On Monday, official Chinese data showed that the economy's growth in the third quarter exceeded expectations, enhancing the chances of achieving the annual growth target set by Beijing.

The Asia-Pacific Economic Cooperation Forum was established in 1989 to promote economic cooperation, trade and investment among the region's economies. It includes 21 economies, including the United States, China, Japan, Russia, South Korea, Australia, Canada, Indonesia and Singapore, and its members represent more than 60 percent of global GDP.

The forum works to facilitate trade and investment, promote regional economic integration, and develop cooperation in the areas of the digital economy, innovation and sustainability. Its mechanisms are based on consensus and voluntary cooperation, without legislative authority imposing binding decisions on the participating economies.

Finance ministers' meetings are gaining importance in light of the challenges facing the global economy, including geopolitical tensions, energy market fluctuations, high financing costs, and debt sustainability risks, in addition to the transformations led by artificial intelligence technologies. The meetings allow members to exchange policies and coordinate positions on growth, financial stability, public spending and investment.