While the mainland and Hong Kong stock markets have been closed for the Lunar New Year, the news from global financial markets has not, on balance, made for relaxed holiday reading. In the United States and Europe there were signs that turmoil in the credit markets is far from over, as investors liquidated holdings in corporate and commercial-property debt. Their concerns were twofold: that a slowdown in the US would hit corporate profits, deal-financing and commercial property; and that the risk of further debt write-downs was spreading from assets backed by subprime residential mortgages in the US to commercial real-estate lending. At the same time, India - a leading engine of global growth - reported that its economic growth was slowing, and negative market conditions forced the withdrawal of a substantial initial public offering for the second time in a week.
This was the backdrop to the discussions in Tokyo this weekend of the G7 finance ministers, representing the Group of Seven leading industrial nations.
These regular consultations usually produce a consensus statement on global economic climate growth and keep differences behind closed doors. This time, however, the loss of confidence in global credit markets arising from the subprime mortgage crisis and the implications of a probable recession in the US have generated more than usual interest in the final statement.
The finance chiefs from the US, Britain, France, Germany, Italy, Japan and Canada say global economic conditions are likely to get worse before they get better. They expect further deterioration in the US housing market, tighter credit, high oil and commodity prices and growing inflationary pressures.
They urged financial institutions to promptly disclose losses on subprime loans, reflecting concern that many, particularly in Europe, have been slow to recognise them. The leaders also called on oil exporters to step up production to curb high prices and inflationary expectations.
Neither appeal tackles the impact on global demand of a slowdown in the US. Washington's G7 partners are unlikely and unwilling to respond to calls from the US for other governments to supply the fiscal stimulus needed to offset it.