G20 Summit
A round of discussions and debates at the G20 summit in Seoul, South Korea have yielded a few positives after a strained start, variously described by commentators as “fractious” and “tense”. Indeed, at one point high-flying officials from the UK, Russia and France were roused with early morning phonecalls in order to stop negotiations between China and the United States over currency policy from breaking down.
China has been reprimanded by the United States for deliberately distorting the yuan, by artificially rendering it weak, in order to give Chinese exports a boosted advantage in world markets. By the same token, say Washington, the Chinese are managing to build a huge foreign reserve.
China has continually argued its commitment to reforming its currency, but has been seen by the rest of the world to
be dragging its heels in this regard. David Cameron, UK Prime Minister acknowledged that, at last, there seemed to be a slow, but sure, realization from China that it could not adopt the charade for much longer without sanctions being imposed.
But it was not all plain sailing for President Obama who, amongst others, was pushing for a limiting 4% curb on
trade deficits and surpluses. No figure was agreed, although it was thought that some progress had been made.
The dangling carrot offered to China and other emerging countries for tighter and more realistic control over their currency was more involvement and representation in the IMF, however, China obviously does not see this as a game-changer.
Overall, the European Union was happy with the outcome which saw at least some progress made and agreement that competitive currency wars were to the detriment of all, even though the spectre of animosity between China and the United States and the prospect of further conflict overshadowing world economical growth was never far from hand.
The G20, formed in 1999, and until more recently the poor cousin of the G8, comprises the 19 leading economic nations in the world alongside the EU.
