Curtain closes on G20 summit. What was achieved – and what wasn't.
The G20 summit in Seoul failed to deliver any agreement on cutting global 'currency imbalances' but hands more economic influence to emerging-market countries.
G20 leaders failed Friday to reach a solid agreement on slashing the “currency imbalances” that are partly responsible for the United States’ trillion-dollar deficit in foreign trade. They did, however, agree on measures to increase the influence of emerging-market countries.Skip to next paragraph
In Pictures Obama's Asia trip
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The “leaders’ declaration” that emerged from the two-day summit in Seoul implied both criticism and respect for China’s emergence as the world’s second largest economic power after the US – though the declaration did not mention any country by name.
G20 leaders avoided any formal agreement to reduce the “currency imbalances” that were a major topic of debate before and during the summit. Instead, without getting down to specifics, their declaration promised to “undertake macroeconomic policies” that would “ensure ongoing recovery and sustainable growth and enhance the stability of financial markets."
In that spirit, it called for “moving toward more market-determined exchange rate systems, enhancing exchange rate flexibility to reflect underlying economic fundamentals” – terms that suggested the need to set currencies at their real rates rather than at artificially low values.
The declaration did call for “refraining from competitive devaluation of currencies” but said nothing of the need for China to revalue its currency, as demanded by US negotiators, so Chinese goods would cease to flood American and other world markets.
IN PICTURES: Obama's Asia Trip
China's powerful new role
Despite concern about Chinese currency, China’s position as a new force on the world stage was evident in the increased role that China and other emerging-market countries will now have in the International Monetary Fund (IMF).
The declaration confirmed that China will lead emerging-market countries in an increased quota that gives it far more say than before in decisionmaking, and emerging market countries also are getting increased representation on the IMF board.
The IMF “better reflects the changes in the world economy through greater representation of dynamic emerging markets and developing countries,” said the declaration. "These comprehensive quota and governance reforms,” it said, “enhance the IMF’s legitimacy, credibility and effectiveness.”
President Obama preferred to take an optimistic view though clearly concerned about China’s overwhelming trade surplus.
Despite the lack of progress, he believed IMF reform and stringent banking regulations, as agreed to in September in Basel, Switzerland, showed the value of the summit. “Instead of hitting home runs, we’re hitting singles,” he said.
While paying tribute to China’s new economic power and influence as “good for the world and good for America,” he was frank in his criticism. “The issue of the renminbi is an irritant not just to the United States but to a lot of trading nations,” he said, observing that China “spends enormous amounts of money interfering in the market to keep it undervalued.”