World leaders conclude crisis discussions at Davos forum

Participants are seen during the traditional farewell buffet lunch at the World Economic Forum (WEF) Annual Meeting 2009 in Davos, Switzerland, Feb. 1, 2009. The World Economic Forum (WEF) wrapped up its annual meeting here Sunday, with pledges of cooperation from world leaders and elites in tackling the global financial crisis. (Xinhua/Christof Sonderegger)

Klaus Schwab, founder and executive chairman of World Economic Forum, gestures during the session "Believing in the Dignity of All" at the World Economic Forum Annual Meeting 2009 in Davos, Switzerland, Feb. 1, 2009. The World Economic Forum (WEF) wrapped up its annual meeting here Sunday, with pledges of cooperation from world leaders and elites in tackling the global financial crisis. (Xinhua/Remy Steinegger)

Chinese Premier Wen Jiabao speaks at the World Economic Forum annual meeting, in Davos, Switzerland, on Jan. 28, 2009.(Xinhua/Yao Dawei)

Participants enjoy the traditional farewell buffet lunch at the World Economic Forum Annual Meeting 2009 in Davos, Switzerland, Feb. 1, 2009. (Xinhua/Christof Sonderegger)

DAVOS, Switzerland, Feb. 1 (Xinhua) -- World political and business leaders concluded a five-day forum here Sunday on tackling the financial crisis and other global challenges, going home with world's expectations for decisions and actions.

One of the most important consensuses reached at the World Economic Forum (WEF) annual meeting in Davos, Switzerland, is the need for international cooperation in dealing with the current crisis, which has affected both developed and developing economies.

"This is not an economic crisis in one country, it is a global crisis. We need global cooperation and action to cope with it," said British Prime Minister Gordon Brown, one of the 43 heads of state or government present at the meeting.

Klaus Schwab, the WEF's founder and executive chairman, went further to stress that the whole society, not only the governments, must be engaged in dealing with the current crisis.

The call for cooperation was echoed by other major leaders, including Chinese Premier Wen Jiabao, Russian Prime Minister Vladimir Putin and German Chancellor Angela Merkel.

In tackling the crisis, confidence is the source of strength, practical cooperation is the effective way and accepting responsibilities is the prerequisite, Wen said in his speech to the forum.

The Chinese premier expressed confidence that China's economy would continue to grow fast and steadily despite the impact of the global crisis.

"It's very encouraging, and the important thing is Premier Wen is using the statistics from China to illustrate his point," said Margaret Chan, director-general of the World Health Organization.

U.S. President Barack Obama was absent from the annual gathering of world elites in the Swiss ski resort. But a senior advisor conveyed his willingness for cooperation.

"Our economy is global, our crisis is global and our solutions must be global," said Valerie Jarrett, Obama's assistant for intergovernmental relations.

The United States cannot be alone in the effort to rebuild confidence in economy and the financial markets, Jarrett said.

She stressed that the Obama administration would be partners with the rest of the world "to establish a workable international framework that can help stabilize the global economy."

But cooperation and coordination may not be easy, given the differences of systems and interests, as well as the degree of impact by the crisis, participants said.

Participants at the meeting also called for an overhaul of the global financial system and the establishment of new economic orders with stronger international regulations.

Brown said he would push for "international standards of transparency and disclosure" for financial institutions.

"And we need to reform and strengthen international institutions giving them power and resources to invest at global level," he said.

Meanwhile, Merkel said a UN Economic Council based on a new charter of global economic principles should be created to monitor the global economy.

But it remains unclear how their ideas would be viewed by other major economies, notably the United States under Obama.

Leaders at the Davos forum also highlighted the importance of fighting protectionism, which tends to rise at times of economic crisis.

They called for the conclusion of the long-stalled Doha Round of global trade opening talks as part of the stimulus package for the world economy.

"Trade is part of the solution of the global crisis," said Swiss Economics Minister Doris Leuthard, who hosted a ministerial meeting of major members of the World Trade Organization on the sidelines of the Davos forum.

"In fact, free trade could serve as the largest economic stimulus package to revive the global economy and fight poverty," she said.

In addition to the economic crisis, participants also discussed other global risks such as climate change, energy, food and water security.

All those risks need global solutions, participants said.

The meeting also reviewed situations in the Gaza Strip and Afghanistan, as well as Iran's nuclear issue.

World leaders at the five-day meeting now are expected to digest the information and suggestions they have received and come up with proper decisions on reviving world economy when they are back home.

The next G20 summit scheduled for April is considered an occasion for major leaders to make important decisions and action plans on the financial crisis.

World leaders also prepare to meet at a UN conference on climate change in Copenhagen, Denmark, at the end of this year to set a global framework for tackling the global issue.

The Geneva-based World Economic Forum has held annual meetings since 1971. As a non-governmental organization, it only provides avenue for important discussions on global issues, leaving decisions and actions to world leaders.

Winners of 2009's WEF Crystal Award announced

Hilde Schwab (1st L), chairperson and co-founder of the Schwab Foundation for Social Entrepreneurship, poses with winners of 2009's WEF Crystal Award (2nd L to R) Indian dancer Mallika Sarabhai, Venezuelan musician Jose A. Abreu, Chinese actor Jet Li and Indian actor Amitabh Bachchan during the Annual Meeting 2009 of the World Economic Forum (WEF) in Davos, Switzerland, Jan. 31, 2009. The forum's Crystal Award honors artists who have used their art and influence to contribute to the international society.(Xinhua/WEF/Remy Steinegger)

Hilde Schwab (L), chairperson and co-founder of the Schwab Foundation for Social Entrepreneurship, presents the WEF Crystal Award to Indian actor Amitabh Bachchan during the Annual Meeting 2009 of the World Economic Forum (WEF) in Davos, Switzerland, Jan. 31, 2009.(Xinhua/WEF/Remy Steinegger)

Hilde Schwab (L), chairperson and co-founder of the Schwab Foundation for Social Entrepreneurship, presents the WEF Crystal Award to Venezuelan musician Jose A. Abreu during the Annual Meeting 2009 of the World Economic Forum (WEF) in Davos, Switzerland, Jan. 31, 2009.(Xinhua/WEF/Remy Steinegger)

Hilde Schwab (L), chairperson and co-founder of the Schwab Foundation for Social Entrepreneurship, presents the WEF Crystal Award to Indian dancer Mallika Sarabhai during the Annual Meeting 2009 of the World Economic Forum (WEF) in Davos, Switzerland, Jan. 31, 2009.(Xinhua/WEF/Remy Steinegger)

Hilde Schwab (1st L), chairperson and co-founder of the Schwab Foundation for Social Entrepreneurship, poses with winners of 2009's WEF Crystal Award (2nd L to R) Indian dancer Mallika Sarabhai, Venezuelan musician Jose A. Abreu, Chinese actor Jet Li and Indian actor Amitabh Bachchan during the Annual Meeting 2009 of the World Economic Forum (WEF) in Davos, Switzerland, Jan. 31, 2009. The forum's Crystal Award honors artists who have used their art and influence to contribute to the international society.

Lexus launches

Lexus launches "RX450h" in Japan

The new Lexus RX450h, a SUV of Toyota Motor Corp's luxury brand, is displayed at the Lexus RX Museum in Tokyo Jan.19, 2009. (Xinhua/Reuters Photo)

The new Lexus RX450h, a SUV of Toyota Motor Corp's luxury brand, is reflected on the Lexus logo at the Lexus RX Museum in Tokyo Jan. 19, 2009. (Xinhua/Reuters Photo)

The new Lexus RX450h, a SUV of Toyota Motor Corp's luxury brand, is displayed at the Lexus RX Museum in Tokyo Jan.19, 2009. (Xinhua/Reuters Photo)

The new Lexus RX450h, a SUV of Toyota Motor Corp's luxury brand, is displayed at the Lexus RX Museum in Tokyo Jan.19, 2009.

Davos organisers hope to draw Obama's key crisis fighters

World Economic Forum (WEF) founder and executive chairman Klaus Schwab gives a press conference on the upcoming WEF annual meeting at forum headquarters in Cologny, near Geneva. US President Barack Obama's chief economic advisor and possibly his pick for treasury secretary are to attend the annual gathering of the world's elite in Davos at the end of the month, organisers said Wednesday. (Agencies）

GENEVA – US President Barack Obama's chief economic advisor and possibly his pick for treasury secretary are to attend the annual gathering of the world's elite in Davos at the end of the month, organisers said Wednesday.

Larry Summers, director of the National Economic Council (NEC), has confirmed he will attend while Treasury Secretary-designate Timothy Geithner, who was undergoing a Senate confirmation hearing Wednesday, has been invited.

"We will have Larry Summers and potentially Geithner," said organiser Borge Brende during a press briefing in Geneva.

The Davos event organised by the World Economic Forum is again set to attract the world's political and economic leaders for five days of talks in the southeastern Swiss Alps between January 28 and February 1.

Coming so close to the inauguration of Obama as president, there has been speculation about who out of his team would attend this year.

The focus is expected to be firmly on the state of the world economy and hopes for a fresh impetus from the new US administration.

As well as discussions about the state of the world, backroom business talks and glitzy parties, the event usually features protestors who meet to vent that anger at the presence of the arch-capitalists and politicians in Switzerland.

This year, however, local authorities in Geneva have decided to ban an anti-Davos demonstration planned in the western Swiss city on January 31 because of fears of violence.

Geneva's state council said it had not been able to get sufficient guarantees on security from the anti-globalisation and left-wing groups behind the protest.

A record number of participants, as well as the highest number ever of heads of state, have signed up for the Davos meeting this year which is to take place amid the worst financial crisis in 80 years.

Among the 43 top politicians and government leaders attending are Russian Prime Minister Vladimir Putin, who is due to open the forum, and China's Premier Wen Jiabao, who is scheduled to speak in a special session.

Latin American leaders such as Colombian President Alvaro Uribe and Mexican President Felipe Calderon are also expected.

British Prime Minister Gordon Brown, German Chancellor Angela Merkel and Japanese Prime Minister Taro Aso are on the agenda for sessions on the financial crisis.

Central bankers and finance ministers are also expected in force this year, with some 36 in attendance.

Notably thin on the ground at this year's meeting will be the heads of major American banks, many of which have shrunk massively, merged or even collapsed due to the US subprime homeloan crisis and the ensuing financial fallout.

Only former Merrill Lynch chief executive John Thain is on Wednesday's list of business leaders attending.

Thain is now Bank of America's president of global banking, securities and wealth management, after Merrill Lynch was sold to Bank of America.

JP Morgan Chase's head for private banking Andrew Cohen was listed among "young leaders" at the meet.

For WEF chief Klaus Schwab, the forum is to take place when the world is undergoing intensive care following deep financial and economic shocks.

But the mountain air of Davos, once well-known for its tuberculosis sanatoriums, could well be the place for the healing process to begin, he said.

"What I hope is that we can provide in Davos for the world economy a sanatorium. Once (the patient) is out of the intensive care unit, he has to recreate his strength, he has to gain new confidence for a new future," said Schwab.

China's economy slowed sharply in 4th quarter

In this Jan. 10, 2009 file photo released by China's Xinhua news agency, Chinese Premier Wen Jiabao, right, holds the wheel of a tractor Changfa Group in Changzhou City during his three-day visit to factories in China's eastern province of Jiangsu. Premier Wen Jiabao is calling for quick action to reverse an economic slump as soon as possible.(Agencies)

BEIJING – Asian economic gloom worsened when China said Thursday growth plunged in the final quarter of 2008 while Japan said exports fell at a record pace in December amid weakening Western consumer demand.

Together with news that South Korea's economy shrank in the fourth quarter, the reports highlight export-dependent Asia's vulnerability to global slumps — even as governments roll out big plans to stimulate their domestic markets.

"It does look like a deeper bottom" for Asia's downturn, said Yiping Huang, chief Asia economist for Citigroup.

In China, economic growth in the fourth quarter fell to 6.8 percent compared with a year earlier, down from 9 percent the previous quarter, the government said.

"Especially since October, the impact of the global crisis spread from small and medium-size enterprises to larger enterprises, from eastern coastal regions to China's heartland," said Ma Jiantang, commissioner of the National Bureau of Statistics, at a news conference.

Analysts said it was China's weakest quarter since at least 2001, though there was some disagreement, possibly due to Beijing's repeated revisions of past data. Goldman Sachs said it tied one quarter of 1998 for the lowest growth in 17 years. A woman who answered the phone at the statistics bureau said she could not confirm when the economy last grew so slowly.

Premier Wen Jiabao, China's top economic official, is due to visit Europe this month to discuss measures to combat the global slowdown.

In Japan, the region's biggest economy, exports fell 35 percent in December, surpassing November's 26.7 percent decline, the government said. South Korea said its economy shrank 3.4 percent in the fourth quarter as exports plunged.

The figures point toward more cuts in jobs and profits in coming months. Major Japanese exporters such as Toyota Motor Corp. and Sony Corp. have cut thousands of jobs and scaled back factory lines.

On Thursday, Sony said it would likely report its first annual net loss in 14 years.

Asian governments have to build up domestic demand to reduce reliance on exports, said Kirby Daley, senior strategist at Newedge Group in Hong Kong.

"Today's data will put to rest forever the notion that Asia could somehow thrive even when the rest of the world slumps," he said. "The idea that intra-regional trade will sustain growth within Asia even without U.S. demand has been debunked."

China announced a 4 trillion yuan ($586 billion) plan in November to boost domestic consumption through higher spending on construction and other projects. But its effects are not expected to be felt for several months. Other governments have announced their own stimulus plans, and central banks have slashed interest rates.

In China, exporters have been hit hardest, but the slump is spreading to domestic industries as demand for autos, real estate and other goods weakens. Exports fell in November and December for the first time in seven years.

Sales for the Shanghai Bao Clothing Co. in the eastern city of Nantong have fallen by 25 percent from the same time last year, said general manager Zhao Jun. That was despite efforts to sell more in China and reduce reliance on foreign markets.

Zhao said exports are now 20 percent of sales, down from 80 percent of sales two years.

"We hope sales will gradually recover in the Year of the Ox," Zhao said, referring to the traditional Lunar New Year that starts Monday. "But I told myself not to put hope on exports. It's going to be tough in 2009."

Thousands of factories have closed in China's export-driven southeast and estimates of job losses exceed 2 million. Spooked by scattered labor protests, communist leaders worry about rising tensions and possible unrest as laid-off workers stream back to their hometowns. They have promised to create new jobs and are pressing employers to avoid more layoffs.

The weak fourth quarter dragged down China's 2008 annual growth to a seven-year low of 9 percent, breaking a five-year streak of double-digit expansion. It was a steep drop from 2007's 13 percent, which saw China pass Germany to become the world's third-largest economy after the United States and Japan.

Analysts have cut forecasts of 2009 growth to as low as 5 percent.

But some pointed to modestly encouraging signs that are emerging in China.

Industrial production grew by 5.9 percent in December, up from November's low of 5.4 percent, according to the statistics bureau. Retail sales rose 17.4 percent in December, an increase over November's growth. Investment in factories, real estate and other assets also was up slightly.

"Almost all major monthly indicators point to a recovery," said Merrill Lynch economists Ting Lu and T.J. Bond in a report. "The rise in domestic demand will likely outpace the fall in external demand, and we expect growth to pick up."

China's stimulus depends on persuading consumers to spend more. Analysts say that will be tough to achieve while families still feel compelled to save up to 50 percent of their incomes to pay for health care, education and other necessities.

Beijing has promised to create a social safety net to reduce such burdens. It announced Wednesday it will spend 850 billion yuan ($124 billion) to improve health care in an apparent effort to encourage households to save less and spend more.

"As long as we keep improving the environment and take measures to address people's misgivings about spending by improving social security, I believe we will continue to see an increase in consumption," said Ma, the statistics official.

(Agencies)