Leaders of the G20 group of major economies are holding a second day of difficult talks in the South Korea capital, Seoul.Tensions are high between some delegations over how to correct distortions in currency and trade.Some fear the conflict – primarily between the United States and China – may threaten global growth.However, a US official voiced optimism the summit would back a declaration addressing global economic imbalances.The US official, who was speaking on condition of anonymity, also said that China was acting to address Washington’s concerns about its currency.”I thing that if you look past some of the heat you’ve seen recently and you look at what’s happening in our very important relationship with China, I’m very encouraged by the progress we’ve seen.British sources say that officials from the UK, France and Russia had to be called in the early hours of this morning after “fractious” negotiations between China and the US broke down in “acrimony”.
The final leaders’ statement is expected to call on the International Monetary Fund to produce what the sources called “objective data” to identify when global imbalances pose a threat to economic stability.However, negotiators were unable to agree which indicators the IMF should measure, let alone what countries should do to reduce global imbalances, the BBC’s Nick Robinson in Seoul reports.Washington says that China’s currency, the yuan, is artificially weak and gives Chinese exporters an unfair advantage as well as leading to Beijing amassing huge foreign reserves.However Chinese officials argue that Beijing has an “unswerving” commitment to reform its currency regime, but that global economic stability is needed to achieve it.”If you’re sick yourself, don’t ask others to take medicine,” commerce ministry spokesman Yu Jianhua said.The US has also faced criticism from several countries for pumping another $600bn (£372bn) into its economy to try to revive growth through a second round of so-called quantitative easing.In a separate development, UN Secretary General Ban Ki-moon is expected later on Friday to urge the leaders to keep their aid promises to the world’s poor despite economic uncertainties.UN officials say that Mr Ban, a former South Korean foreign minister, will tell the gathering that the host nation has shown poverty can be eliminated.
A spokesman for the summit said on Friday that G20 leaders were likely to reach some sort of agreement on resolving trade and currency disputes.Earlier, in a joint news conference with the South Korean leader, US President Barack Obama insisted the G20 final communique would include mechanisms to promote balanced and sustainable international economic growth.However BBC economics editor Stephanie Flanders said that the draft version of the communique still left much to be agreed on – especially on issues around exchange rates and imbalances.In a seeming acknowledgement that the summit was not going to be as successful as previous meetings, British Prime Minister David Cameron said the G20 was “not in its heroic phase” – an apparent reference to its well-received response to the 2008 financial crisis.The group needed to do “a lot more work” on fixing economic imbalances, Mr Cameron said.
Some economists fear that if steps are not made to resolve the so-called “currency wars”, this could act as a barrier to trade which may risk a return to global recession.President Obama has called on other nations to agree on clear rules for reducing big trade surpluses and deficits – and is urging agreement that a strong US recovery is in everyone’s interests.”The most important thing that the United States can do for the world economy is to grow because we continue to be the world’s largest market and a huge engine for all other countries to grow,” he said.He also called for a stronger promise from China that it will let its currency go up very soon, not simply at some point in the future.That would make Chinese exports costlier abroad and make US imports cheaper for the Chinese to buy.However our economics editor said that while the US may make headway at the G20, it had been weakened by the global criticism of its policies.This means that China, and other nations with huge trade surpluses such as Germany, would “not be signing up to any hard numbers or targets”, she added.On Friday, Chinese President Hu Jintao unveiled a four-point plan for achieving strong global economic growth, the state-run Xinhua news agency reported.Mr Hu the global community should “champion open trade and promote co-ordinated development” and also to “narrow the development gap”. – Bbc