US warns Asia-Pacific leaders over territorial rows

Increasingly tense territorial rows in the Asia-Pacific threaten the global economy, U.S. Secretary of State Hillary Clinton warned Sunday at the end of a leaders' summit plagued by divisions. The annual gathering of Asia-Pacific Economic Cooperation (APEC) heads was meant to build goodwill in long-term efforts to tear down trade barriers within their bloc, which accounts for more than half of the world's economic output. While progress was made to cut tariffs on environmentally friendly goods, and commitments renewed to fight protectionism, bitter territorial disputes disrupted the two-day event in Russia's port city of Vladivostok. Japanese Prime Minister Yoshihiko Noda and Chinese President Hu Jintao did not hold customary talks on the summit sidelines because of a row. Similarly Noda and South Korea's Lee Myung-Bak -- both allies of Washington -- shunned each other. Philippine President Benigno Aquino also failed to meet with Hu, after declaring it his top priority beforehand. The Philippines and China have endured months of bruising diplomacy over competing claims to the South China Sea -- of which Beijing claims almost all -- including a maritime standoff. "Now is the time for everyone to make efforts to reduce the tension and strengthen the diplomatic involvement," Clinton, who was filling in for U.S. President Barack Obama, told reporters as she prepared to leave Vladivostok. "This region of the world is the economic engine in what is still a fragile global economy. "It's not in the interest of the Asian countries, it's certainly not in the interest of the United States or the rest of the world, to raise doubts and uncertainties about the stability and peace in the region." Clinton urged Seoul and Tokyo to "lower the temperature" over sparsely populated islands known by Koreans as Dokdo and by Japanese as Takeshima, but controlled by South Korea and where Lee made an unprecedented visit last month. Japan's relations have also deteriorated anew with China over competing claims to islands in the East China Sea. APEC spans the Pacific Rim, from China to Chile, and includes the world's three biggest national economies -- the United States, China and Japan -- with its 21 members accounting for 44 percent of the world's trade. In their final summit statement, the leaders pledged to help boost the sluggish global economy by strengthening demand in their own countries, cutting public debt and committing to no new trade barriers. Russian President Vladimir Putin, whose government spent $20 billion upgrading Vladivostok ahead of APEC to showcase the country's growing ambitions for the Far East and expand trade with Asia, described the event as a big success. "The Vladivostok summit has once again reaffirmed the APEC economies' commitment to the underlying principles of free trade and integration," he told reporters. "The Asia Pacific region is a locomotive, a driving force in the world economy." But the leaders' statement expressed concerns over global challenges, saying the economy was "subject to downside risks". "The financial markets remain fragile, while high public deficits and debts in some advanced economies are creating strong headwinds to economic recovery globally. "Events in Europe are adversely affecting growth in the region," it said, although it also welcomed European leaders' commitment to "take all necessary measures" to prevent a break-up of the eurozone monetary union. The leaders pledged to move "more rapidly" to market-driven exchange rates and "refrain from competitive devaluation of currencies", the document said. China is often the target of U.S. allegations that it deliberately keeps the value of the yuan low to make Chinese exports cheaper in the global markets, although Beijing has denied any currency manipulation.