SEOUL — President Barack Obama on Friday left meetings of the Group of 20 leading and developing economies having failed for now to secure firm measures on administration goals for rebalancing global trade, an issue seen as crucial for creating more U.S. jobs.
The final communiqué of the G20 conference contained only general language accompanied by plans for future review of what U.S. officials consider two main trade issues – stopping export-oriented countries from devaluing their currency and establishing warning levels for nations’ deficit and surplus levels.
While White House officials sought to cast the document as a step in the right direction, it combined with an earlier impasse over a free trade agreement with South Korea to cap a rough G20 for Washington.
The bruising series of meetings suggested that as America struggles to exit its economic downturn and emerging economies continue to post big growth numbers, the ability of U.S. leadership to push through big agendas on the world stage has been clipped to some extent.
“We have had outsized influence over world affairs for a century now,” Obama said at a press conference on Friday. “And you are now seeing a situation in which a whole host of other countries are doing very well and coming into their own, and naturally they are going to be more assertive in terms of their interests and ideas.”
Although Obama described that development as “a healthy thing,” the G20 highlighted ongoing tensions between the United States and the second-largest economy in the world, China, which loomed as a major target of Obama administration’s proposals to reign in nations with big trade imbalances.
Many U.S. officials contend that China’s decision to keep the value of the Yuan low, some studies say by 20 percent versus the dollar, has both hampered the U.S. economy and fueled global trade disparities.
At the press briefing, Obama lashed out at China in uncharacteristically blunt terms that essentially accused Beijing of being a currency manipulator.
“The issue of the (Yuan) is one that is an irritant not just to the United States, but is an irritant to a lot of China’s trading partners and those who are competing with China to sell goods around the world,” Obama said. “It is undervalued. And China spends enormous amounts of money intervening in the market to keep it undervalued.”
There had been little expectation of big announcements about currency – the Chinese government has made it clear it won’t revalue quickly – and though the communiqué said the G20 nations agreed there should be a move toward market-driven exchange rates it gave no indication of when or how that might happen.
The communiqué was similarly vague about the issue of countries adopting targets to keep deficits and surpluses within a set percentage of their Gross Domestic Product.
The document cited a need for “indicative guidelines” to counter “persistently large imbalances,” but it included no actual figures. Instead, the G20 leaders agreed to continue mulling the matter “with progress to be discussed by our Finance Minister and Central Bank Governors in the first half of 2011.”
Speaking with Canadian press, the country’s prime minister, Stephen Harper, noted that ““I think it’s fair to say we did not resolve those issues here.”
A senior Obama official who met with reporters on the G20 sidelines, speaking on the condition of anonymity to give him more room to comment, repeated the administration line that the communiqué was imperfect but a good start.
“Of course the ultimate test over time is do countries actually change their policies at a pace and a level that increases the odds that we get stronger growth. So you won’t know until you see how this develops over time,” the official said. “But you have to start with the basic framework of consensus. And we think we achieved that.”
The official added: “You’ve got to live in the real world.”
Both China and Germany, the world’s largest exporters, had signaled early on that they were unenthusiastic about adopting specific guidelines for trade balances. They also criticized, loudly and publicly, the U.S. Federal Reserve’s decision this month to buy $600 billion worth of Treasury bonds, saying the move was intended to lower the dollar and help American exports.
An article carried by Xinhua, the Chinese state newswire, on Friday said that after the Fed move there were growing “concerns ... about the stability of the U.S. dollar as a global reserve currency.”
Still, Obama and his team said the G20 meeting should be viewed in the longer term.
The communiqué and its 38 pages of plans included agreement on revamping the International Monetary Fund to give emerging markets more of a voting share and a bigger presence on the IMF’s executive board – the fruition of discussions at earlier G20 meetings. It also called for a long list of measures such as support for free trade, tax reform in developing countries and anti-corruption efforts – though without any powers of enforcement, the statements were more suggestions than edicts.
“We should not anticipate that every time countries come together that we are doing some revolutionary thing,” Obama told reporters. “Instead of hitting home runs, sometimes we're going to hit singles. But they’re really important singles.” Soon after, Obama said he had to leave to catch a plane – he was headed to Japan for the Asia-Pacific Economic Cooperation summit. So was Chinese President Hu Jintao.