PARIS, (Reuters) – China rejected plans yesterday to use real exchange rates and currency reserves to measure global economic imbalances, casting heavy doubt on the ability of Group of 20 major economic powers to reach agreement.
Speaking shortly before the start of a two-day meeting of finance ministers and central bankers, Chinese Finance Minister Xie Xuren also said the G20 should use trade figures rather than current account balances to assess economic distortions.
G20 countries, which together account for 85 percent of world economic output, are trying to agree a set of measurements as a basis for economic policy guidelines to avoid a repeat of the 2008 global financial crisis.
“We think it is not appropriate to use real effective exchange rates and reserves,” Xie said at a meeting with Russian, Brazilian and Indian counterparts.
The hardline Chinese stance highlighted splits over how to define economic imbalances and prescribe action to remedy them, a key aim of France’s G20 presidency.
A G20 official said China was the only country which spoke against accepting the list of indicators.
“I cannot tell you what will happen tomorrow. Nobody knows,” he said. “No-one is trying to push China into a corner.”
Two other G20 sources said negotiators had failed to reach agreement on a list of indicators by which to measure imbalances in the global economy and would leave it up to their finance ministers to try and seal a deal on specifics on Saturday.
Even then, agreement was uncertain, they said.
French President Nicolas Sarkozy, who holds the G20 presidency this year, urged ministers not to get sidetracked by the indicators dispute and welcomed the fact that China had agreed to host a G20 seminar on reforming the international monetary system in Shenzhen in late March.
“I want to avoid your debates getting bogged down in interminable discussion about these indicators, which are distracting us from the essentials,” Sarkozy said in a speech.
The European Union’s economic affairs commissioner, Olli Rehn, said the right indicators to tackle global imbalances included the current account, the real effective exchange rate and currency reserves as well as public and private debt.
“Especially, the current account account and the real effective exchange rate are essential,” Rehn told reporters.
