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Nusa Dua (Indonesia) (AFP) – Asia-Pacific leaders opened an annual economic summit on Monday in the shadow of global growth clouds that are darkening by the day as the United States struggles to shake off policy paralysis.

The U.S. government shutdown has stopped President Barack Obama from attending the Asia-Pacific Economic Cooperation (APEC) summit on the Indonesian resort island of Bali.

That has worried U.S. allies at a time when China is on the rise and Washington is trying to push through an ambitious 12-nation trade pact that excludes Beijing.

Obama’s enforced absence at both APEC and an East Asia summit straight afterwards in Brunei has left the stage clear for Chinese President Xi Jinping, who has been touring the region and will address a parallel meeting of APEC business leaders later Monday.

The title of Xi’s speech is “China in transition: what can the Asia-Pacific expect?” Some expect an economic bonanza. Others, looking nervously at Beijing’s far-reaching territorial claims, expect a more turbulent region and want reassurance from Washington.

But the United States may be ill-equipped to offer much immediate global leadership as it confronts a menace mightier than even the shutdown: the possibility that it might default on its colossal debts unless Congress raises the federal borrowing limit by October 17.

Malaysian Prime Minister Najib Razak said in Bali that “the debt ceiling has got to be reviewed, otherwise the consequences would be quite severe.”

The United States is hobbled at a moment when, according to a statement by APEC foreign and trade ministers, the world economy can ill afford more uncertainty following the 2008 financial crisis.

Previewing Tuesday’s final summit declaration, they said that “global growth is too weak, risks remain tilted to the downside, and the economic outlook suggests growth is likely to be slower and less balanced than desired”.

Interviewed by Monday’s Jakarta Post, Xi agreed that the “world economy has entered a period of deep readjustment” but said China was ready to lead the way as part of “the world’s most dynamic and most promising region”.

He also touted the benefits of free-trade pacts. China is leading talks on another trade agreement grouping 16 East Asian nations just as Washington’s rival “Trans-Pacific Partnership” (TPP) appears to be running into trouble.

“China is very important for the Southeast Asian economies, like it or not,” said Finance Minister Chatib Basri of Indonesia, which has stayed out of the TPP talks.

Before he called off his foreign travel, Obama was meant to throw his presidential weight behind a top-level round of talks among the TPP countries in Bali on Tuesday.

But doubts about the TPP are gathering pace, and also about Obama’s vaunted “pivot” of foreign policy focus back to Asia.

Attending APEC “would have been a golden opportunity for America and President Obama himself to show leadership in that context of the new emphasis towards Asia,” Malaysia’s Najib said.

Obama was also forced to cancel visits to Malaysia and the Philippines due to the shutdown.

The perennial disputes that hobble all trade agreements, such as market access and protection of intellectual property, are rearing anew in the TPP negotiations and Malaysia sees the end-of-year deadline as “very tight.”

U.S. ally Australia is another TPP party but is loath to antagonize China, whose rocketing economic growth has been fueled to a large degree by Australia’s bounteous natural resources.

“China’s growing strength is a benefit to the world, not a challenge,” new Prime Minister Tony Abbott said after talks with Xi, adding that he would visit China next year at the head of a major delegation comprising political, business and academic leaders.

“Certainly we in Australia owe much of our prosperity to the rapidly growing trade relations between our two countries,” he said.

At the level of APEC, which spans the Pacific from East Asia and Australia to the United States and Mexico, the 21 members have settled for a more distant time-frame of 2020 for a non-binding series of trade goals that have failed to make much headway at successive summits.

Harmony will break out on Tuesday, however, when all the leaders — minus Obama — don national garb of the host country for APEC”s traditional “family photo.” Indonesia has reportedly eschewed its famous batik cloth for shirts and blouses made of a silk-like fabric called endek.

Soldiers and paramilitary police were out in force for the summit. This week marks the 11th anniversary of the Bali bombings, which killed 202 people, mostly Western holidaymakers.


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