G20 in war of words over trade

13:59, November 11, 2010      

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A heated exchange between the world's 20 biggest rich and emerging nations has broken out ahead of summit talks starting Thursday on a drive to rebalance the global economy.

Preparatory negotiations for the two-day summit in Seoul grew heated as deputy finance ministers battled over how to redress growth imbalances arising from China's growth and the US' deficit woes.

"Each country was sticking to its original position," Kim Yoon-kyung, spokesman for South Korea's G20 presidential committee, told reporters Tuesday.

The deputies were meeting anew Wednesday to hash out the summit communique that will be adopted tomorrow by leaders, including the US and Chinese presidents.

The US and Europe have long accused China of keeping the yuan grossly undervalued to boost exports.

Right now, the booming economies of emerging markets Brazil, India and China are like "rockets" being fueled by US and European investor inflows, Nicolas Eyzaguirre, the head of the IMF's Western Hemisphere Department, said Tuesday at a business conference in Sao Paulo.

In return, slumping developed countries are trying "to attach ropes to those rockets to drag themselves out" of their low-growth situations, he said at the event.

But "China is avoiding being caught by the rope," Eyzaguirre said.

Emerging economies worry that Washington's decision to pump an extra $600 billion into the fragile US economy will flood their financial markets in search of higher returns.

"The US is not aware enough of its obligations on capital markets and has not sufficiently thought about the attacks suffered by emerging economies," Chinese Vice Finance Minister Zhu Guangyao told reporters Monday.

"We will have frank discussions with our US colleagues" in Seoul, he said, echoing others, including German Chancellor Angela Merkel.

Obama, facing widespread criticism as he arrived for the summit, said a strong US economy was vital to the global recovery and urged his G20 counterparts to put aside their differences and do their part to bolster growth.

"When all nations do their part - emerging no less than advanced, surplus no less than deficit - we all benefit from higher growth," Obama said in a letter sent to G20 leaders Tuesday.

UN Secretary-General Ban Ki-moon appealed to the G20 not to forget another part of its summit business - reformulating aid for the world's poorest nations.

"The global economic recovery remains fragile," he said in Seoul. "The voices of the vulnerable must be heard."

Source: Global Times


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