With rising international clout, Brazil gears up to mediate the ‘currency war’ between China and the US at G20 summit.
|Obama warned big surplus economies against relying on exports at the Apec summit in Yokohama [Reuters]|
Barack Obama, the US president, has urged big surplus economies such as China, the world’s second largest, to end reliance on exports for economic growth, while his Chinese counterpart vowed to step up efforts to depend more on domestic demand.
Obama and Hu Jintao, China’s president, issued the statements during Asia-Pacific Economic Co-operation (Apec) meeting of business leaders on Saturday in the Japanese city of Yokohama.
“Going forward, no nation should assume that their path to prosperity is simply paved with exports to America”
At the summit, which will carry on throughout the weekend, world leaders will discuss policies aimed at ensuring balanced global economic growth and the establishment of a vast free trade area.
It follows a two-day summit in Seoul, South Korea’s capital, of the Group of 20 major economies, which was dominated by talks on global economic recovery.
“One of the important lessons the economic crisis taught us is the limits of depending primarily on American consumers and Asian exports to drive economic growth,” Obama said in Yokohoma on the final leg of a 10-day tour that also took him to India, Indonesia and South Korea.
“Going forward, no nation should assume that their path to prosperity is simply paved with exports to America.”
Hu told the business forum that China wanted to boost domestic demand growth and remained committed to reforming its exchange rate “on the basis of retaining initiative, controllability and gradualness”.
The G20 countries are trying to find ways of bringing down overly large account surpluses and deficits among major economies to prevent them from increasing protectionism to a degree that could hurt international trade.
The United States and China have been debating over who is doing more damage to international trade with their economic policies.
Washington contends the yuan is undervalued, giving it an export advantage.
On the other hand, Beijing has criticised the recent US federal reserves’ purchase of $600bn of government bonds, which aims to boost the country’s economy by injecting more money into it, saying the excessive spending will weaken the dollar to the detriment to other nations that trade with it.
Obama has argued that a strong US economy, the largest in the world, is pivotal to a strong global economy.
“A strong recovery that creates jobs, income and spending is the most important contribution the United States can make to the global recovery,” Obama said.
“We all recognise that the value of a foundation for a strong a durable recovery will not materialise if American households stop saving and go back to spending based on borrowing.”