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China open to G20 talks on new economic balance
2009-09-23
PITTSBURGH (Reuters) - A U.S. drive to build a more balanced global economy gained the qualified support of China on Wednesday in a sign that Group of 20 leaders may be ready to take joint action to prevent future economic crises. Muzi.com News 10093667-1 (muzi.com) U.S. President Barack Obama and other leaders of the G20 major developed and developing countries are due to meet in Pittsburgh on Thursday and Friday, with restoring economic growth and tackling climate change high on their agenda. Muzi.com News 10093667-2 (muzi.com) They are shifting their focus from fighting the global recession to preventing it from happening again in their third gathering since the collapse of investment bank Lehman Brothers a year ago. Muzi.com News 10093667-3 (muzi.com) Pittsburgh, once known as the "Steel City" and now considered one of America's most livable cities, was braced for the arrival of G20 and other leaders and perhaps 3,000 journalists. Sporadic afternoon rainstorms pounded the roof of the convention center where the event was being staged. Muzi.com News 10093667-4 (muzi.com) Protest groups planned marches on the summit site. Concrete barriers were in place outside the PNC Financial Services Group building, suggested by anti-capitalist protesters as a target for rallies on Friday, along with other companies such as Starbucks and McDonald's. Muzi.com News 10093667-5 (muzi.com) As a precaution, workers boarded up the glass entrance and covered statues outside the city's popular Carnegie Museums of Art and Natural History. Muzi.com News 10093667-6 (muzi.com) Central to the talks will be a U.S. plan to correct the world's economic imbalances by shrinking surpluses in big exporting countries like China and boosting savings in debt-laden nations that include the United States. Muzi.com News 10093667-7 (muzi.com) Rebalancing would take a monumental effort. Muzi.com News 10093667-8 (muzi.com) China's private consumption makes up a little more than a third of overall gross domestic product, while in the United States and Britain, consumption accounted for nearly three quarters of GDP in boom times. Muzi.com News 10093667-9 (muzi.com) The other side of the coin is savings. Chinese and Indian households last year saved about 40 percent and 32 percent of their disposable incomes, respectively, while the personal savings rate in the United States was just 3.2 percent. Muzi.com News 10093667-10 (muzi.com) Obama wants a framework of "mutual assessment" whereby the International Monetary Fund (IMF) makes policy recommendations on rebalancing to the G20 every six months, according to a paper obtained by Reuters. Muzi.com News 10093667-11 (muzi.com) Analysts believe Obama's plan will meet resistance from Beijing should it pose any risk to China's export-driven economic growth. So far, China is sounding engaged. Muzi.com News 10093667-12 (muzi.com) "We approve of countries strengthening their macroeconomic policy coordination and together pushing forward the sustainable and balanced development of the world economy," China's foreign ministry said. Muzi.com News 10093667-13 (muzi.com) China sounded much less sure about concrete coordinated policy action, saying advice from international financial bodies should be for reference only. Muzi.com News 10093667-14 (muzi.com) A senior Obama administration official said China had warmed to the rebalancing proposal, which he said was not aimed at any specific country. Muzi.com News 10093667-15 (muzi.com) "I think there has been a significant evolution in their thinking about this issue over the course of the (economic) crisis," he said. Muzi.com News 10093667-16 (muzi.com) GERMAN COOLNESS Muzi.com News 10093667-17 (muzi.com) Germany, the world's biggest exporter of goods last year, signaled some coolness to the rebalancing idea, with a government spokesman saying Berlin wanted to focus on financial market regulation. Muzi.com News 10093667-18 (muzi.com) European Commission President Jose Manuel Barroso expressed concern about how much sway the G20 should have in overseeing the global economy. Muzi.com News 10093667-19 (muzi.com) Barroso told Reuters that "reinforcement should not be done at the cost of existing institutions that have specific, well established mandates like the IMF, or even the World Bank. We cannot dilute the IMF's position. Muzi.com News 10093667-20 (muzi.com) The European Union also pushed for regulatory action, unveiling its blueprint for a banking super-watchdog and a pan-European supervisor that it hopes can be replicated on the global stage. Muzi.com News 10093667-21 (muzi.com) The EU said the watchdog would have power to overrule individual countries such as Britain which is fighting to keep control over the centerpiece of its economy, the City of London financial center. Muzi.com News 10093667-22 (muzi.com) "Our aim is to protect European taxpayers from a repeat of the dark days of autumn 2008, when governments had to pour billions of euros into the banks," Barroso said in a statement. "The European system can also inspire a global one and we will argue for that in Pittsburgh." Muzi.com News 10093667-23 (muzi.com) The rules to reform the financial industry -- widely blamed for causing the economic slump -- need approval by the 27 EU national governments and the European Parliament to take effect. Muzi.com News 10093667-24 (muzi.com) Obama, under pressure for results on a slew of foreign policy problems, issued a blunt message to world leaders at his United Nations debut, saying other countries must shoulder a larger burden in tackling international crises. Muzi.com News 10093667-25 (muzi.com) "Those who used to chastise America for acting alone in the world cannot now stand by and wait for America to solve the world's problems alone," Obama said. "Now is the time for all of us to take our share of responsibility." Muzi.com News 10093667-26 (muzi.com) Europe also wants a deal on executive pay, a message pushed on Wednesday by French President Nicolas Sarkozy. Muzi.com News 10093667-27 (muzi.com) He said in a television interview an agreement on limiting bank bonuses had not yet been sealed ahead of the G20 summit. Muzi.com News 10093667-28 (muzi.com) "We clearly want a ceiling on the amount of bonuses, for example, as a percentage of their revenues, as a part of their capital, and that's what we're talking about at this moment." Muzi.com News 10093667-29 (muzi.com) The senior Obama official said progress had been made in talks about executive pay. "I think we're narrowing our differences," he said. Muzi.com News 10093667-30 (muzi.com) But he doubted that currency issues would feature prominently in G20 discussions, when asked about French concerns about the strength of the euro. Muzi.com News 10093667-31 (muzi.com) TRADE, GLOBAL WARMING ALSO ON AGENDA Muzi.com News 10093667-32 (muzi.com) Also up for discussion in Pittsburgh will be reforms to the IMF, trade policy and global warming. Muzi.com News 10093667-33 (muzi.com) G20 finance ministers earlier this month made little progress on how much industrial nations should contribute to help developing nations deal with global warming. Muzi.com News 10093667-34 (muzi.com) Rich and poor countries are split on how much money should be on the table and how to spread out emissions curbs. Muzi.com News 10093667-35 (muzi.com) The United States is working toward an agreement with G20 partners to phase out subsidies for fossil fuels. Muzi.com News 10093667-36 (muzi.com) Michael Froman, deputy national security adviser and top G20 aide to Obama, said the United States was hoping to reach an agreement about the issue at the Pittsburgh summit. Muzi.com News 10093667-37 (muzi.com) Activists from the Greenpeace environmental group rappelled off one of Pittsburgh's bridges with a banner displaying the message: "Danger. Climate Destruction Ahead. Reduce CO2 Emissions Now." Muzi.com News 10093667-38 (muzi.com) India's prime minister called for a strong warning against trade protectionism as he set out for Pittsburgh. Muzi.com News 10093667-39 (muzi.com)
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