As Seoul prepares to host G20, Summers speaks of trade 'imbalances'
Ahead of the G20 summit in Seoul, top US economic adviser, Larry Summers, talks of a trade 'imbalance,' dodges questions about a 'trade war,' and sounds a positive note.
Seoul, South Korea — A sense of excitement is sweeping this spruced-up capital just two days before the arrival of the leaders of 20 of the world’s economic powers for a Group of 20 (G20) summit that few observers believe will solve deep-seated problems confronting the entire global trading system.
Platoons of police in sparkling new uniforms roamed subways and streets. Posters and giant TVs displayed notices telling people to welcome visitors. Radio commercials urged everyone to clean the streets before the arrival Wednesday of 19 heads of state, including President Obama.
In the midst of an outburst of national pride, however, finance ministers and lower-ranked officials referred to as “sherpas” haggled over the wording of an “action statement” that both Mr. Obama and China’s President Hu Jintao can agree on.
Obama’s top financial adviser, Larry Summers, in a live teleconference from the White House to a meeting of the Asia Society’s Korea Center avoided predicting the real consensus for which participants have been pressing.
Asked if he believed the G20 would then end without any real agreement, he responded carefully, “I am confident we will reach a successful outcome at the summit” – a circumlocution that suggested a face-saving document that would put off real solutions for the next G20 next year in France.
A prolonged struggle?
Rather than come to terms now, Mr. Summers predicted a prolonged struggle to bring about “global rebalancing,” the polite term for bringing about more equitable balances in trade. US officials are convinced that China’s currency is set, as a result of government intervention, at a level far below its real value so the Chinese can compete more favorably in foreign markets.
“The imbalances will not be fixed,” he said, but he believed that the vast surpluses that China has enjoyed with the US might decrease as China focuses on “domestic demand.” In the meantime, he said, “You are going to see continuing discussion” on the issue.
William Rhodes, a former Citigroup vice chairman who hosted the session with Summers, saw the tension among the Group of 20 as reflecting the rise of an economic bloc of Asian economic powers that he forecast “will be very dominant in the world of the future.” At this stage, he said, “We are on the edge of a crisis” – though he was “optimistic China will open itself over time.”
Seoul puts on the glitz
Such concerns were far from the thoughts of Seoul’s Mayor Oh Se-hoon as he boasted of the wonders of this metropolis of 10 million people before audiences of hundreds of journalists as well as aides of visiting leaders.
In dinners and dance performances, the mayor advertized this capital of soaring skyscrapers rising above crowded streets and markets as “a city that foreigners want to experience not only as tourists but also as investors and residents.”
New street signs in English, taxis whose drivers speak at least one foreign language, and a new “global business center” to bring in foreign investment were some of the lures cited by the mayor at a lavish dinner on a floating restaurant in the Han River.
Mr. Oh, a conservative widely believed to have aspirations of running for president in the next election in Dec. 2012, shrugged off concerns about whether the summit would rise above the level of a grand happening with little real substance in terms of long-range results.
“Please don’t ask me such questions,” he said, saying farewell to a stream of foreign guests. “I don’t know anything about that. I only know about Seoul."