Joe Biden and Kristalina Georgieva listen, as Peruvian President Dina Boluarte speaks at the Leaders Retreat during the Asia-Pacific Economic Cooperation Summit in San Francisco, California, on Friday. Reuters
“It sends a signal to the rest of the world that we must find ways to cooperate on those challenges where no country on its own can succeed,” Georgieva told Reuters in an interview on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit.
The Biden-Xi meeting is “important at a time when geo-economic fragmentation has indeed deepened with negative consequences for the prospects for accelerating growth,” Georgieva said.
Biden and Xi agreed on Wednesday to open a presidential hotline, resume military-to-military communications and work to curb fentanyl production, showing tangible progress in their first face-to-face talks in a year.
The meeting did not alter a growing array of national security-driven trade and investment restrictions between the world’s two largest economies, but Georgieva said the resumption of communications was important at a very uncertain time for the global economy.
Georgieva said the US-China thaw had a positive effect on leaders at the APEC summit, where her key takeaway was that “the spirit of cooperation is demonstrably stronger. And the world does need it.” Georgieva said revived US-China communications will also help foster cooperation on global challenges, especially climate change, with the COP28 climate conference due to start at the end of November.
US-China engagement also will be an important factor on negotiations over World Trade organisation reform, including restoration of its dispute settlement system. WTO ministers are due to meet in February in the United Arab Emirates.
Israel’s war against Hamas continues to be “devastating” for the population and economy of Gaza, with “severe impacts” on the West Bank’s economy, Georgieva said as well.
It is also putting pressure on the neighbouring economies of Egypt, Lebanon and Jordan, which are seeing reduced tourism and higher gas costs, she said.
Israel, too, will see an economic slowdown, as nearly 8% of its workforce has been diverted to military service, she said.
For Egypt, the IMF is “seriously considering” a possible augmentation of the country’s $3 billion loan programme due to economic difficulties posed by the Israel-Hamas war. An IMF staff team is currently holding virtual consultations with Egyptian authorities on the programme.
The Israel-Hamas war has had “a very, very limited impact” on the global economy as an initial run-up in energy prices was not sustained, but impacts could grow if there’s an “accident” that widens the conflict or it is prolonged, Georgieva said.
“The sooner this war ends, the better,” she said.
US Treasury Secretary Janet Yellen said during meetings last week with her Chinese counterpart that a key outcome of US-China economic engagement was Beijing’s support for a 50% increase in IMF quota-based resources, without an immediate rise in shareholding for China.
Georgieva said it was important for the IMF to start quickly on revamping its shareholding formula to boost the representation of fast-growing developing economies: “The world needs an IMF that is financially strong, and that is also legitimate.”
Earliers, the APEC leaders’ declaration reaffirmed their determination “to deliver a free, open, fair, non-discriminatory, transparent, inclusive, and predictable trade and investment environment.” “We are committed to necessary reform of the WTO to improve all of its functions, including conducting discussions with a view to having a fully and well-functioning dispute settlement system accessible to all members by 2024,” it said.
Despite the frictions over the Ukraine and Middle East wars, the Sino-US talks will have brought some relief to APEC members concerned by a worsening trajectory in the rivalry between the superpowers, which are also the world’s largest economies. Xi appeared to achieve his aims, earning US concessions in exchange for promises of cooperation, an easing of bilateral tensions that will allow more focus on economic growth, and a chance to woo foreign investors who increasingly shun China.
Biden, addressing the other APEC leaders on Friday, urged them to work together to ensure that artificial intelligence brings change for the better, rather than abusing workers or limiting potential.
Biden used the APEC summit to highlight the strong US economy and its ties to other Pacific nations, even as his vision for greater regional cooperation to counter China’s influence stumbled on the trade front over his bid to strengthen workers’ rights.
Much US-China tension is linked to democratically governed Taiwan, which China claims at its own, and the issue has raised fears of a conflict between the superpowers.
Taiwan’s APEC envoy, semiconductor magnate Morris Chang, told a news conference on Friday he believed the Biden-Xi summit had been a “good meeting.”
He said he had informal interactions with Biden, US Vice President Kamala Harris and US Secretary of State Antony Blinken on the sidelines of APEC, but not with Xi.
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