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.
BBC | 23 October 2010 | 11:29 GMT
Finance ministers from the G20 leading economies have agreed reforms of the International Monetary Fund, giving major developing nations more of a say. At a meeting in South Korea, they agreed a shift of about 6% of the votes in the IMF towards some of the fast-growing developing countries.
Those nations will also have more seats on the IMF’s Board, while Western Europe will lose two seats. But the US will retain the veto it has over key decisions. Such decisions require an 85% vote – Washington holds 17% under the IMF’s weighted voting system.
During the talks in the South Korean city of Gyeongji, the ministers also agreed to move towards more market-determined currency systems. The pressure has been on China to end its policy of holding the yuan down to maintain its competitiveness. There was, however, no timetable for change, so Beijing has kept to its long-held position that it will reform its currency policy, but gradually.
BBC News | Friday, 25 June 2010 | 12:36 GMT
Europe must focus on growth as well as cutting spending to reduce national deficits, US Treasury Secretary Timothy Geithner has told the BBC. Speaking in Washington ahead of G8 and G20 meetings this weekend in Canada, Mr Geithner said that world leaders must concentrate on the "paramount" challenges of growth and confidence. He added the world could not rely as much on the US as it has in the past. The European Union says securing growth "remains a priority". The Group of Eight and Group of 20 rich and developing nations are assembling on Friday for three days of talks. The leaders of the G8 countries – Canada, France, Germany, Italy, Japan, Russia, the UK and the US – are meeting in Muskoka, Ontario on Friday and Saturday to discuss help for poor countries. Later on Saturday, in Toronto, the G20 will open talks on how best to emerge from the worst financial crisis since the Great Depression, and will conclude the summit on Sunday.
Many European governments, including the UK, have implemented severe austerity measures in recent weeks in order to cut debt levels. UK Prime Minister David Cameron, who has arrived in Canada along with other leaders, said in an article for the Globe and Mail newspaper: "No-one can doubt the biggest promise we have to deliver: fixing the global economy." "I believe we must each start by setting out plans for getting our national finances under control," he added. Herman van Rompuy, the president of the European Council, said that the EU’s key words this weekend would be "growth, confidence and medium term". "The restoring of confidence in budgetary policies goes hand in hand with effective growth strategies," he said ahead of the meetings.
When asked if Europe faced the possibility of Japanese-style stagnation if it carries on with debt reduction policies, Mr Geithner said "Europe has the capacity to prevent that". But he added: "Europe can make a choice to put in place the reforms and policies that will provide the possibility of stronger growth rates in the future. This
Reuters | Tue Jun 22, 2010 | 9:22pm IST
India said on Tuesday it would oppose a single global bank levy designed to insure against failing institutions, an IMF proposal backed by Germany and France, when Prime Minister Manmohan Singh attends the G20 summit in Canada. Asia’s third-largest economy, where financial institutions are tightly regulated, argues its banks are sound and what is required to prevent failures globally is stricter capital rules which New Delhi will push at the summit this week. "On the issue of bank tax, as far as India is concerned, the health of our banking system speaks for itself," Foreign Secretary Nirupama Rao said, when asked about India’s stand on the contentious levy. She said India hoped the summit would see the leaders arrive at "common principles for reforming financial markets", while Finance Secretary Ashok Chawla said India would "support all efforts at raising the benchmark on financial regulation".
The levy proposal was widely expected to be set to rest at the Toronto summit, but with Germany and France renewing their push for it, the bank tax could emerge as a sticking point among the world’s top economies. A German official on Tuesday said it was a key test if the grouping could find a common position on important matters. In a joint statement on Tuesday, Britain and the two nations said they would coordinate planned levies and were committed to the full implementation of the financial sector reforms agenda. Opposing the proposal are Japan, Brazil and Canada, which have argued their banks did not need tax-funded bailouts at the height of the financial crisis.
Reuters | Sat Jun 19, 2010 | 6:56am IST
The United States pressed China on Friday to move toward a market-based exchange rate, but Beijing said not to meddle with its management of the yuan, setting the stage for a clash at next week’s G20 summit. World leaders gathering in Toronto on June 26-27 are struggling to maintain the crisis-forged unity that has been credited with preventing another Great Depression. Now that the global economy is on the mend, divisions are beginning to show. U.S. President Barack Obama released a letter to his Group of 20 colleagues that zeroed in on prickly policy differences over China’s currency stance and debt-wary Europe’s rush to rein in bulging budget deficits.
Canadian Prime Minister Stephen Harper, who will host the meeting, urged G20 countries to halve their fiscal deficits by 2013 and stabilize debt-to-GDP ratios by 2016, according to an official, who also said China’s currency would be discussed. But China largely took the issue off the table, saying its currency, also known as the renminbi, was its own business. "The RMB is China’s currency, so I don’t think it is an issue that should be discussed internationally," Cui Tiankai, a vice foreign minister who is China’s G20 Sherpa, the official in charge of preparing for the summit, told a news briefing.
Reuters | Mon Apr 5, 2010 | 5:25pm IST
US Treasury Secretary Timothy Geithner will try to strengthen bilateral ties with India during talks in New Delhi this week, but his visit may be overshadowed by Washington’s tense relationship with China. Both the United States and India will be simultaneously pushing trade and foreign exchange agendas with China, as they discuss cooperation on infrastructure development and financial markets. Geithner on Saturday delayed an April 15 report to Congress on whether China manipulates its yuan currency, pledging to work instead with Group of 20 members – India and China included — to persuade Beijing to de-peg its yuan from the dollar. Foreign Minister S.M. Krishna will be in Beijing for talks this week on a range of issues, smoothing out trade flows and reducing non-tariff trade barriers to shrink a $16 billion trade deficit with China.
"There is one potentially big issue of common interest between the U.S. and India – the Chinese exchange rate," said Arvind Subramanian, senior fellow at the Peterson Institute for International Economics, a Washington think tank. "China’s undervalued exchange rate affects emerging market economies like India even more than it does the United States," he said. Subramanian added that India might be persuaded to support a broad-based effort aimed at currency rebalancing in a large, global forum like the G20 grouping of wealthy and big emerging economies. China has intervened in currency markets to keep the yuan steady against the dollar since July 2008 at a rate that critics say effectively provides a lucrative subsidy to Chinese exports. India maintains a floating exchange rate policy.
Reuters | Sun Apr 4, 2010 | 7:58am IST
US Treasury Secretary Timothy Geithner said on Saturday he was delaying an April 15 report on whether China manipulates its currency but pledged to press for a more flexible Chinese currency policy. The decision follows Thursday’s announcement in Beijing that Chinese President Hu Jintao will attend a nuclear security summit meeting in Washington April 12-13 and seems to be a move to keep tensions over currency in check. The Obama administration seeks broad global support for measures to curb Iran’s nuclear ambitions, making it an inconvenient time to risk inflaming the dispute over China’s currency policy. Analysts said it would have been a slap in the face to Beijing if Washington had labelled China a currency manipulator days after Hu’s visit.
Geithner said he will use upcoming meetings of the Group of 20 and a US-China economic summit in Beijing in May to try to get China to budge. "I believe these meetings are the best avenue for advancing US interests at this time," Geithner said in a statement issued at midday on the Easter holiday weekend. Treasury gave no indication when it will actually release the report. The US Business and Industry Council, a trade group, said the administration apparently would delay the release of the report until after the G20 summit meeting in June. As a result, "for three more months, more American factories will close or cut back production and more of their employees will lose their jobs" because unilateral US tariffs are needed to combat "predatory trade practices."