The leaders of the world’s richest democracies voiced concern about emerging economies at a summit in Japan Thursday, as their host, Prime Minister Shinzo Abe, made a pointed comparison to the 2008 global financial crisis.
However, not all his guests appeared to agree.
The leaders of the ‘G7’ did agree on the need for flexible spending to spur world growth but the timing and amount depended on each country, Deputy Chief Cabinet Secretary Hiroshige Seko told reporters, adding some countries saw no need for such spending.
Germany in particular has been resisting calls for fiscal stimulus, backed by Britain.
“G7 leaders voiced the view that emerging economies are in a severe situation, although there were views that the current economic situation is not a crisis,” Seko said after the first day of a two-day G7 summit in Ise-Shima, central Japan.
Abe presented data showing global commodities prices fell 55 percent from June 2014 to January 2016, the same margin as from July 2008 to February 2009, after the Lehman collapse.
Lehman had been Wall Street’s fourth-largest investment bank when it filed for Chapter 11 protection on Sept. 15, 2008, making its bankruptcy by far the biggest in U.S. history. Its failure triggered the global financial crisis.
Abe hopes, some political insiders say, to use a G7 statement on the global economy as cover for a domestic fiscal package including the possible delay of a rise in the nation’s sales tax to 10 percent from 8 percent planned for next April.
Obama told a news conference that he stressed the importance of pushing back against competitive currency devaluations, which some countries might be tempted to use to boost exports. Japan and the three Eurozone members of the G7 (France, Germany and Italy) have all benefited from central bank action that has directly or indirectly kept their exchange rates low in the last couple of years.
Other topics at the summit include terrorism, cybersecurity and maritime security, especially China’s increasing assertiveness in the East and South China Seas. Beijing has territorial disputes with Japan and several Southeast Asian nations.
G7 leaders agreed that it was important to send a clear signal on the South and East China Seas, Seko told reporters, adding that China was mentioned in discussions on maritime matters on Thursday.
Over in China, though, Foreign Ministry spokeswoman Hua Chunying said the South China Sea issue had “nothing to do” with the G7 or any of its member states.
“China is resolutely opposed to individual countries hyping up the South China Sea for personal gain,” Hua said.
Obama pointed to the threat from North Korea’s nuclear and missile programs, saying the isolated state was “hell bent” on getting atomic weapons. But he said there had been improved responses from countries in the region like China that could reduce the risk of Pyongyang selling nuclear material.
Obama said G7 leaders had been rattled by some of Republican presidential candidate Donald Trump’s statements, which he said displayed ignorance and lacking in statesmanship.
On Wednesday night, Abe met Obama for talks dominated by the arrest of a U.S. military base civilian worker in connection with the killing of a young woman on Japan’s southern Okinawa island, the reluctant host to the bulk of the U.S. military in Japan.
The attack has marred Obama’s hopes of keeping his Japan trip strictly focused on his visit on Friday to Hiroshima, site of the world’s first atomic bombing, to highlight reconciliation between the two former World War Two foes and his nuclear anti-proliferation agenda.