Finance leaders agree on economic aim
G-20 goal: Curb trade imbalances
GYEONGJU, South Korea — Global finance leaders, under pressure to display unselfish policies, agreed yesterday to boost cooperation on rebalancing the world economy to help defuse tensions that had sparked fears of trade conflicts.
The Group of 20 vowed to avoid potentially debilitating currency devaluations and reduce trade and current account imbalances, amid a growing recognition that restructuring the world economy is necessary to accommodate the greater role played by fast-growing China and other developing economies.
G-20 finance ministers and central bank governors met for two days in the South Korean city of Gyeongju ahead of a summit of their leaders in Seoul next month. Just two weeks ago, a G-20 meeting in Washington failed to resolve differences that had stoked worries a possible trade war could trigger another economic downturn.
Nations in Asia and other regions have been trying to stem strength in their currencies amid sustained weakness in the US dollar out of fear their exports will become less competitive.
At the same time, China’s currency, the yuan, has been effectively pegged to the greenback, provoking criticism it is being kept artificially low and giving the country’s exporters an unfair advantage.
An Asia relying less on exports for growth is seen as one of the adjustments that nations should make to ensure more stability in the global economy and markets.
Stronger currencies, meanwhile, would make imported goods cheaper and boost local spending as a contributor to economic growth.
The G-20, which accounts for about 85 percent of the global economy, said in a statement that it will “move toward more market-determined exchange rate systems’’ and “refrain from competitive devaluation of currencies.’’ It also vowed to cooperate on reducing “excessive imbalances.’’
“I think it’s fair to say for the first time we see the major economies come together and recognize that excess imbalances that persist over a period of time, that can threaten growth and financial stability, need to bring about adjustments in policies,’’ US Treasury Secretary Timothy Geithner told reporters after the meeting.
The G-20 includes both rich countries such as the United States, Japan, and Germany and emerging ones such as China, India, and Brazil. It assumed the role of global economic leader following the 2008 financial crisis.
South Korean President Lee Myung-bak, chairman of the upcoming G-20 summit and a staunch advocate of free trade, had implored the finance officials on Friday to come up with what he called a “mutual win-win.’’