U.S. says won’t solve China currency issue at Seoul G20

U.S. says won’t solve China currency issue at Seoul G20
# 02 November 2010 04:27 (UTC +04:00)
Baku – APA. The United States said on Monday it does not foresee China bowing to pressure over its yuan currency during a Group of 20 summit in Seoul, playing down expectations for major progress on global economic imbalances, APA reports quoting “Reuters”.
"We do not expect the China currency issue, or the imbalance issue to be solved once and for all in Seoul. This is part of an ongoing effort," Michael Froman, White House deputy national security adviser, told reporters.
President Barack Obama’s will attend the G20 in South Korea November 10-12 during a 10-day tour of Asia, when he will also visit India, Indonesia and Japan on a mission to deepen trade ties to boost U.S. exports and jobs back home.
His departure on the longest foreign trip of his presidency so far will be just three days after U.S. congressional elections, in which Obama’s Democrats are expected to be punished by voters for stubbornly high U.S. unemployment.
The G20 forms a central part of the president’s economic efforts in Asia, which also includes a meeting of the Asia-Pacific Economic Cooperation forum in Japan, and a speech to a U.S.-India business summit to promote corporate America.
U.S. officials say they are also working hard to remove remaining obstacles to advancing a long-stalled free trade pact with South Korea in time for Obama’s meeting with South Korean President Lee Myung-bak during his visit to Seoul.
G20 played a vital coordination role during the 2008 global financial crisis. But that spirit of collaboration has frayed since growth resumed, amid concern some countries might aid exports through competitive currency devaluations, and officials said Obama would emphasize cooperation.
"The risk is increasingly clear that uncoordinated and unilateral actions could undermine the strong, sustained and balanced growth that we all need in the G-20," said Treasury Under Secretary for International Affairs Lael Brainard.
U.S. officials say China holds the value of the yuan artificially low against the dollar to support exports, adding to a massive surplus in trade with the United States that Washington would like to ease by getting Beijing to let the yuan rise.
"It is very important to see China move forward on its commitment to a market-determined exchange rate that reflects market fundamentals," Brainard said.
"We saw an accelerated pace of appreciation between early September and the time that we released a statement on October 15. If we continue to see progress of that nature, it would make a material difference," she said.
Obama will hold a face-to-face meeting with Chinese President Hu Jintao on the sidelines of the G20, giving them an opportunity to discuss the matter further.
The U.S. president will press other G20 leaders to endorse a framework already laid out by finance ministers to get countries to push their current account balances toward more sustainable levels -- but will not aim for numeric targets.
U.S. Treasury Secretary Timothy Geithner had initially suggested adopting a current account target of 4 percent of GDP for both trade deficit and surplus countries.
But this got little support from the big surplus nations and Chinese officials flatly say a fixed target will not work for them, although they stress that the two countries should continue to work with each other to ease the imbalances issue.
What Washington wants is for the big surplus countries like China and Germany to use "all the tools at their disposal" to boost domestic demand to suck in more exports, Brainard said.
Economists say the main tool to achieve this goal is currency adjustment.