Global growth, maritime security to top agenda at G-7 summit
The summit in Mie Prefecture comes amid growing uncertainty in the world economy tied to the slowdown in emerging economies that had been the main driver of global growth, the impact of falling oil prices on resource-producing countries, as well as the possible exit of Britain from the European Union following a June 23 referendum.
"With risks and vulnerability in the world economy rising, we would like to issue a clear and powerful message so the G-7 can take the lead in achieving sustainable and robust growth of the global economy," Japanese Prime Minister Shinzo Abe said Thursday.
Abe and his counterparts from Britain, Canada, France, Germany, Italy, the United States and the European Union will also try to show a unified response to the refugee crisis in Syria, the situation in Ukraine, tax evasion, North Korea's missile and nuclear weapons development, as well as promotion of high quality infrastructure for sustainable growth, according to Japanese officials.
Given the slowdown, for example, in the Chinese economy that sent its growth rate to the lowest level in seven years in the January-March quarter, Abe has expressed eagerness to strike a G-7 accord on coordinated fiscal action to spur global demand.
But given Germany's resistance to calls from Japan and the United States for boosting fiscal stimulus to bolster global growth, the leaders are likely to settle on a vague agreement to use all policy tools -- monetary, fiscal and structural -- depending on conditions and resources in each country, according to experts.
"Fiscal space and the economic situation vary in each country. The key is whether each country can commit itself to advancing growth strategy and structural reform toward achieving high-quality growth," the Mitsubishi Research Institute, a Tokyo-based think tank, said in a report released Thursday.
"Taking into account the economic and fiscal situation of each country, fiscal stimulus should be limited to research and development, infrastructure investment and other areas that would contribute to higher productivity," the report said.
For Japan, if Abe gains consent from other G-7 leaders for taking all possible measures including fiscal spending, monetary policy and structural reforms to foster growth, it could give him an excuse to justify delaying a consumption tax increase planned for April next year.
Since Abe returned to power in 2012, Japan has conducted aggressive monetary easing in an effort to buoy the economy and beat deflation. Economists have urged the premier to focus more on expanding domestic demand and promoting structural reforms.
The Ise-Shima summit also comes as Beijing steps up island construction and militarization of outposts in the South China Sea in an attempt to assert territorial claims in disputed waters.
Abe hopes to affirm with his G-7 peers the importance of complying with court decisions based on international law, especially when a ruling expected to come in the next few weeks from the Permanent Court of Arbitration in The Hague appears likely to reject the legitimacy of China's claims to almost the whole South China Sea, according to diplomatic sources.
The arbitration was lodged by the Philippines, which, along with Vietnam and other claimants, is locked in territorial disputes with China in the waters.
In a statement issued after a meeting last month in Hiroshima, the G-7 foreign ministers urged all states, without singling out China, "to fully implement any decisions rendered by relevant courts and tribunals."
Japan is not a claimant in the South China Sea, but it does not recognize China's attempts to alter the status quo through unilateral actions, not least because Tokyo is embroiled in a row with Beijing over a group of islets in the East China Sea.
China has repeatedly sent official ships into Japanese waters around the Senkaku Islands in an attempt to undermine Japanese control of the islands, which it calls Diaoyu.
In what will be the first G-7 summit in Asia in eight years, the G-7 leaders will hold an outreach meeting Friday with their peers from Indonesia, Laos, Vietnam and four other non-G-7 countries at which the South China Sea and promotion of quality infrastructure are likely to draw attention, as well.
Japan is eager to promote quality infrastructure in Asia, where China is boosting its clout through increased aid and the launch of the Beijing-led Asian Infrastructure Investment Bank.
Other outreach countries are Bangladesh, Papua New Guinea, Sri Lanka and Chad. With Chad, which currently serves as chair of the African Union, the G-7 will discuss development issues ahead of the Aug. 27-28 summit in Kenya of a Japan-led African development conference.
After accompanying U.S. President Barack Obama to his visit to Hiroshima later Friday, Abe plans to hold separate talks Saturday with the leaders of the seven outreach countries in Nagoya, central Japan, according to the Japanese Foreign Ministry.
