Prime Minister Naoto Kan may find himself in a tough position next week when Asian and European leaders focus on fiscal rehabilitation at an Asia-Europe Meeting in Brussels.
Kan has changed his schedule and decided to attend the Oct. 4-5 summit in hopes of meeting with Chinese Premier Wen Jiabao on its sidelines to mend the two countries’ strained ties.
With or without the China factor, however, Kan may have to brace for criticism at the gathering on account of Japan’s snowballing public debt and lack of a silver bullet to spur economic growth.
According to a draft declaration, the leaders will say the global economic crisis has exposed “weaknesses” in the global economic and financial system, saying there is a connection between large fiscal deficits and the “continued fragility of the financial markets and uncertainty in the world economy.”
The current wording of the declaration says priority should be given to restoring market confidence, urging Asian economies to make efforts to sustain a robust recovery and maintain growth momentum.
The draft also has the leaders pledging to strengthen “sources of growth” and that the economies concerned must work on reducing excessive public debt and global imbalances, citing the existence of countries with enormous trade surpluses as an example.
The leaders will then pledge better coordination on reforms to prevent financial crises and maintain sustainable growth of their economies.
The summit meeting will draw representatives from 48 countries and organizations, including Japan, China, South Korea and members of the European Union.
Topics discussed at the meeting will also be on the agenda at the summit of the Group of 20 advanced and emerging economies in Seoul in November and the Asia-Pacific Economic Cooperation forum in Yokohama later that month.
The AEM draft declaration expresses the leaders’ resolve to conclude the Doha Round of global trade liberalization talks under the framework of the World Trade Organization, noting that its conclusion would be a powerful stimulus for sustained recovery on a global scale.
On International Monetary Fund reforms, the leaders are expected to express support for giving developing countries greater representation in the organization given the greater weight they carry in today’s world economy.
But discussions on this are expected to be postponed to a future general meeting of the IMF given a dispute between Europe and developing countries over the matter.
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