“Long-lasting, high, and volatile” oil prices may increase inflationary pressures and slow growth, the Group of 20 major industrial nations said in a statement at the end of their two-day meeting on the outskirts of Beijing on Sunday.
They also expressed the need to improve the transparency and efficiency of the oil market.
The statement stressed the importance of promoting energy conservation and efficiency, including developing alternative and renewable energy sources, and reducing subsidies on oil products.
The G20 countries also expressed a commitment to reducing “trade-distorting” domestic support, and eliminating “all forms” of export subsidies in agriculture.
They said they are committed to “significantly” increasing market access for goods and services.
The annual summit was to be immediately followed by China-US economic talks that were expected to yield more pressure on Beijing to loosen controls on its currency, the yuan.
Alan Greenspan is one of the
US Treasury Secretary John Snow and Federal Reserve chairman Alan Greenspan were leading the US delegation.
Treasury officials in Xianghe, a heavily guarded fortress-style resort an hour’s drive outside Beijing, said they intended to intensify and broaden the debate over China’s economic reforms, urging China to further develop domestic demand and financial services – as well as allowing greater flexibility for the yuan.
The talks are part of an effort to redress the record trade gap between the two countries, which surged to $162 billion in China’s favour last year and is forecast to exceed that figure this year.
“If we truly want to deal with these imbalances bilaterally or multilaterally, you need to focus on more than just the currency,” said US Treasury Undersecretary for International Affairs Tim Adams.
Pressure on yuan
Critics of China’s currency policy contend that the yuan is undervalued by as much as 40%, giving Chinese exporters an artificial price advantage, and that this is a major factor behind the trade imbalance.
Chinese officials say they cannot move any faster in currency reforms after having revalued the yuan by 2.1% in July, at the same time giving up a decade-old peg to the US dollar and switching to a basket of major currencies that includes the Japanese yen and euro.
The currency has gained only about 0.3% in value since then.
“I don’t think that will work toward their interest,” Li Ruogu, chairman of the Export-Import Bank of China and a former central bank vice-governor, said on Saturday of the US pressure.
“China acts as a crucial engine for the whole world, and to damage the Chinese growth and Chinese economic development will do no good for anyone,” Li told Dow Jones Newswires.
In opening the G20 meeting, Chinese President Hu Jintao decried the widening divide between the industrialised world and the least developed nations, financial crises and “new manifestations of trade barriers and protectionism”.
Hu Jintao decried the widening
The talks, which include the Group of Seven industrial nations, leading developing countries and international institutions such as the World Bank and International Monetary Fund, addressed a wide range of issues, including concerns over the prolonged surge in crude oil prices, which are hovering above $60 a barrel.
Participants in the G20 gathering account for 90% of the world’s gross domestic product and 80% of all trade.
Securing a stable supply of oil is a major concern for China, whose imports have surged as its economy grows at an annual rate of more than 9%.
Delegates to Saturday’s talks raised “many good proposals” for financing an IMF programme to aid economies badly hit by high oil prices, IMF managing director Rodrigo Rato told reporters.
Rato said high oil prices were bound to persist, posing a threat to stable world growth.
World Bank President Paul Wolfowitz on Saturday urged wealthy nations to make concessions on farm trade to help salvage stalled World Trade Organisation negotiations for the sake of the world’s poorest 1.2 billion people.
“The solution has to come from opening markets,” he said.
“These people need aid but more than aid they need a place to sell the products of their work. Otherwise they’ll be aid dependent forever and that’s not a solution.”