BBC | 22 October 2010 | 12:21 GMT
US proposals that countries set targets to reduce trade imbalances appeared to be running into opposition at the G20 meeting of leading economies. US Treasury Secretary Timothy Geithner wrote to G20 members on Friday suggesting limiting surpluses and deficits to a percentage of output. But Japan, Germany and Russia expressed opposition to what one delegate called "planned economy" thinking. The proposal is seen as mainly directed at China, which had yet to comment.
Washington has been pressing China for months – without success – to let its currency appreciate. Getting Beijing to tackle its large trade surplus would be an indirect way of forcing the yuan to rising in value.
In his letter to G20 colleagues on the opening day of a meeting of finance ministers in South Korea, Mr Geithner said countries should aim to reduce surpluses or deficits to a targeted share of gross domestic product. US officials said the target would be 4% of GDP by 2015. China’s current account surplus was 4.9% of GDP in the first half.
Japanese Finance Minister Yoshihiko Noda summed up the mood among other big exporters, including Germany, saying Mr Geithner’s proposal was "not realistic". Australian Treasury Secretary Wayne Swan said he was not sure a "one-size-fits-all" approach could work. Tensions over exchange rates are like to dominate the meeting, being held ahead of a summit by heads of state next month.
The G20 finance ministers are trying to find a co-ordinated path out of the financial crisis and avert what some leaders have called "currency wars". Many countries have been happy to see the value of their currencies fall, as it boosts their export competitiveness.
The US has accused Beijing of resisting upward pressure on the yuan by buying dollars, thereby making America’s exports to China more expensive. However, China has expressed unhappiness at what it sees, as foreign interference in what it believes is an internal matter.