WASHINGTON (Reuters) - Top officials from Pacific Rim countries should "pivot away" from Europe's problems at a summit in Hawaii this week and pursue their own plans to boost global growth, a senior U.S. Treasury official said on Monday.
U.S. Treasury Assistant Secretary Charles Collyns said finance ministers and leaders of the Asia Pacific Economic Cooperation economies will discuss Europe's debt crisis, but a main U.S. focus will be on rebalancing economies in the region to boost domestic consumption and infrastructure investment.
"I think for us, a key challenge of the meeting will be to pivot away from the Europe-dominated discussion to think, 'Well what can we in APEC do that will improve all our prospects in a world that is certainly going to be affected by the weaker prospects in Europe,'" Collyns told a news briefing.
The APEC meetings in Honolulu, to be hosted by President Barack Obama and Treasury Secretary Timothy Geithner starting on Wednesday, come hot on the heels of a Group of 20 summit in Cannes, France, last week. In that meeting, progress on currencies was drowned out by developments in Europe's debt crisis, including calls for a bailout referendum in Greece.
Geithner will host APEC finance ministers on Wednesday and Thursday, followed by a leaders summit on Friday and Saturday.
Collyns said export-focused APEC economies, led by China, need to allow their currencies to respond to market forces and look for other sources of domestic growth that are not focused on producing goods for export.
He added that APEC will want to see China reaffirm and elaborate on commitments it made at last week's G20 summit to accelerate movement toward a market-determined exchange rate.
The G20 named China for the first time in the context of commitments by the group of wealthy and developing economies to move toward more exchange rate flexibility. The United States and other western nations have long pressed Beijing to let its yuan float more freely, arguing that it is kept artificially undervalued to keep China's exports cheaply priced.
"More flexible exchange rate management in China will also open the way to more flexible exchange rate management across the APEC economies, particularly those economies that are competing closely with China," Collyns said.
FOREX MARKETS NOT "DISORDERLY"
Collyns, who works on international issues for Treasury, said discussion of Europe's problems also will likely crop up in the context of foreign exchange-rate interventions by Japan and South Korea. Seoul has cited disorderly foreign exchange markets due to Europe's woes as a reason for its efforts to stem the won's rise.
Collyns disagreed with this assessment and said it would be a good discussion point for APEC, where a number of east Asian members tightly manage currencies and are building current account surpluses and foreign exchange reserves.
"Certainly, what's happening in Europe has some consequences for exchange markets, but we don't think on a day-by-day basis, foreign exchange markets are disorderly or excessively volatile as a result of what's happening in Europe," Collyns said. "The pattern of intervention across asian economies is persistent and large, not specifically tied to particular events that create uncertainty and volatility"
Collyns said a G20 action plan agreed in Cannes to boost jobs and growth can serve as a model for APEC members to follow, even those that aren't part of the elite G20 most influential economies.
He said apart from pursuing flexible exchange rate regimes, east Asian economies can take steps to boost short-term domestic demand, and pursue structural reforms that boost the earning and spending capacity of their consumers, including a stronger social safety net in China. Reforms that boost access to financial services and credit also will help, he said.
"Those that have fiscal room (should) take advantage of that to boost the strength of domestic demand at a time when the global economy is being undermined by increasingly uncertain prospects in Europe," Collyns said, naming China as a country with such fiscal capacity.