SHANGHAI — U.S. Treasury Secretary Paul H. O'Neill joined finance ministers from Asia and the Pacific Rim on Sunday in an upbeat assessment of the global economy, predicting a quick U.S. recovery and applauding Japan's painful reforms.
O'Neill and other finance chiefs of the 21-member Asia Pacific Economic Cooperation Forum wrapped up a two-day meeting in the Chinese city of Suzhou. In a closing statement, they expressed optimism that the U.S. economy will pick up by year's end, giving a needed boost to sagging world growth rates.
"Long-term prospects remain favorable" in the global economy, the statement said.
The European Union was the only economic power singled out for not doing enough to help end the global slowdown. The ministers scolded the European Central Bank for failing to cut interest rates as aggressively as the U.S. Federal Reserve.
"Europeans can do a bit more," said Singapore's finance minister, Richard Hu.
In his comments, O'Neill said he sees the U.S. growth rate rebounding to 3.2% next year. Figures last month showed the U.S. economy expanded at a sluggish 0.2% in the April-June quarter.
He brushed aside Friday's Labor Department figures showing August unemployment at a four-year high of 4.9%, saying there were already signs that an increase in business spending was shrinking inventories.
It was O'Neill's first trip to China as Treasury secretary. His next stop is Beijing, where he said he will urge officials to speed up economic reform and continue opening China's markets.
He praised China's high growth rates as "quite wonderful to see."
China's Finance Minister Xiang Huaicheng told reporters that China's economy is expected to grow 7% this year--a slight drop from last year, but still impressive.
But he said China still faces formidable challenges, among them rising unemployment and a debt-ridden banking system.
"There are too many structural problems and . . . institutional problems which are yet to be resolved," Xiang said.
When he meets with Chinese officials on Monday, O'Neill is also expected to bring up Washington's displeasure with Beijing's punishment of Credit Suisse First Boston. China dropped the Zurich-based investment bank from a multimillion-dollar share offering by China Unicom Ltd. after Credit Suisse invited Taiwanese officials to a conference in Hong Kong.
"One of the kinds of things that we will talk about . . . is the importance of true openness and the sense that people don't get penalized because they are doing things around the world," O'Neill said.
Beijing views Taiwan as part of its territory and tries to limit contacts by the island's government with the outside world.
On Wednesday, O'Neill is to leave Beijing for Tokyo to meet with Prime Minister Junichiro Koizumi.
O'Neill praised the efforts of the Japanese leader to end his country's decade-long economic slump by lowering government spending and forcing banks to write off bad loans.
But he urged Koizumi, who took office four months ago, to move as quickly as possible.
"What Koizumi and his aides have said they're going to do, most people would say is directionally correct," O'Neill said. "Let's get on with it."