The G20 summit concluded this morning after failing to tackle growing concerns that currency wars between Washington and Beijing will undermine hard-won stability in the global economy.
A statement declaring that the group of developed and emerging nations will monitor developments for signs of countries artificially deflating their currencies gained a lukewarm welcome from critics who said the G20 had papered over the cracks of a problem that could jeopardise recovery from the financial crisis.
The summit set vague "indicative guidelines" to measure imbalances between their multi-speed economies but – calling a timeout to let tempers cool – left the details to be discussed in the first half of next year.
In the final statement of the summit, the group's fifth since the financial crisis plunged the world into recession in 2008, the leaders vowed to move towards market-determined exchange rates and shun competitive devaluations.
The prime minister, David Cameron, said it was significant the G20 had recognised that global imbalances posed a problem and was alive to concerns of a race to the bottom.
He praised the G20 for putting in place a mechanism that will allow the International Monetary Fund to assess countries and the effects of their exchange rate policies.
Downplaying concerns the issue had been "kicked into the long grass" he said it was significant there was a timetable for addressing concerns at the next G20 summit in France.
He also hailed a point made in the communique that there was a critical, but narrow, window of opportunity to conclude the long-elusive Doha round of trade liberalisation talks launched in 2001.
Britain stood on the sidelines for much of the conference as verbal jousting between the United States and China dominated proceedings.
Washington argued progress towards a more balanced global economy is undermined by China's policy of undervaluing its currency. China has stockpiled its trade surpluses while the US has been left with record trade deficits.
China responded that moves by the Federal Reserve to print money were also having a distorting effect.
"Exchange rates must reflect economic realities … Emerging economies need to allow for currencies that are market driven," US President Barack Obama told a news conference after the communique was agreed.
"This is something that I raised with President Hu [Jintao] of China and we will closely watch the appreciation of China's currency."
Little firm progress
The G20's accord sought to recapture the unity that was forged in crisis two years ago, but deep divides meant the leaders could not venture much beyond what was already agreed by their finance ministers last month.
Negotiators had laboured until the early hours of the morning to thrash out an agreement their leaders could all endorse, despite sharp disagreements that were on public display in the days before the meeting.
In a departure from earlier statements, the G20 said it would allow emerging market countries with "adequate reserves and increasingly overvalued flexible exchange rates" to use "carefully designed macro-prudential measures".
That is a green light for countries such as Brazil, which has already sought to stem massive inflows of capital, to take further measures, short of deliberately engineering a lower exchange rates.
Tempers had flared over the US Federal Reserve's latest $600bn bond-buying programme aimed at strengthening a shaky recovery, while Ireland's worsening debt troubles served as a reminder that the financial system is far from fully healed.
"This hasn't been a love-fest," an official who participated in the negotiations said.
In particular, the leaders were unable to agree on how to identify when global imbalances pose a threat to economic stability, merely committing themselves to a discussion of a range of indicators in first half of 2011.
Tim Condon, head of research at ING Financial Markets in Singapore said it was "hard to disagree" with the vows of the leaders but they had fallen short of the progress hoped for going into the summit.
"They decided just to put down a lot of laudable objectives as the conclusion of the meeting and hope that they can do better, that more can be accomplished in future meetings," he said.
The G20 has fragmented since a global recession gave way to a multi-speed recovery. Slow-growing advanced economies have kept interest rates at record lows to try to kickstart growth, while big emerging markets have come roaring back so fast that many are worried about overheating.
"G20 credibility does depend on showing results … we cannot get out of this with beggar-thy-neighbour policies," Stephen Harper, the Canadian prime minister, said. "We need instead to continue to co-ordinate our actions going forward. The recovery is fragile.
"I don't think the fact that we aren't there yet, we haven't resolved all these problems, means we will fall back."
Comments in chronological order (Total 189 comments)
12 November 2010 8:39AM
Reminds of that Seoul classic "Money's too tight to mention"
12 November 2010 8:40AM
Hmm when Global leaders pledge anything that tends to mean the opposite is a dead cert - happy days!
12 November 2010 8:42AM
These deals with countries such as China and India are deals between Wall street and the those countries and they only serve to enrich the barons of Wall street even further.
It's about outsourcing work to these countries in order to get cheap labour and not to create jobs here at home.
read up on the Nafta Highway in the US for a clue as to what is REALLY going on.
Wall street and the big corporations and banks which caused the recession.
Wall street runs the government no matter which party appears to be in power!!!! This whole attack on the poor by the wall street puppets in power is criminal.......this is only a pretend socialist country.
In real socialism we ARE all in it together but in this country like in the US the rich who are a small group at the top control 80% of the worlds wealth...
These greedy bastards are sucking the country and the world dry of it's resources and leaving a trail of utter poverty and environmental destruction and unless we can stop that we will see suffering on a scale that is unimaginable!
The obscene wealth at the top is supposed to trckle down but it doesn't do so. These rich pigs have caused the deificit and they are the ones who should be going without to balance the books...the books which they fiddled....not the poor and the unemployed and the sick!!!!!!
Wake up you idots!!!!!
12 November 2010 8:45AM
Pffft.
I can't imagine that the G20 want to do anything about the trade imbalances that make their member nations so much wealthier than the rest of the world.
No end to farm subsidies, for example.
12 November 2010 8:48AM
The usual bluff and blunder and as for those pledges yes let's hope Nick Clegg hasn't had a hand in formulating any of those otherwise they might as well just chuck them into the bin straight off.
Capitalism is in it's dying days they just haven't realised it yet. Tried, tested and failed. Time to move on.
12 November 2010 8:50AM
harrykipper:
Actually it is the complete opposite. Did you even read the article ?
The entire thrust of what the developed West wants is for the yuan to appreciate.
That would actually make China a less attractive place to outsource jobs to. And in consequence make western exports more attractive for the Chinese to buy, and thus boost job creation in the west.
12 November 2010 8:53AM
So there is going to be a currency war. That is what I deduce from the headline, "G20 leaders pledge to avoid currency war." Our Prime Minister, aka, "Cast-iron Dave", promised us a referendum on Europe; he promised to repeal the Human Rights Act; he promised to cut the Inheritance tax; he promised there would be no extra controls from the EU etc, etc, etc, etc, etc, etc, etc, etc, etc, etc
12 November 2010 8:57AM
@realliberal
Haven't you realied by now that in the brand new world of post-Coalition, pre-election promises count for nothing?
12 November 2010 9:03AM
The horse has already bolted.
12 November 2010 9:06AM
I like fudge - doesn't half rot your teeth though.
12 November 2010 9:09AM
In the last decade the various global meetings which 20 years ago would have been hailed as a success in themselves are gradually creating a sense of global apathy.
It doesn´t matter if the talks are for currency agrrements or trade agreements or greenhouse gas emissions or biodiversity measures or deforestation control, our global economic and political system is incapable of agreeing and implementing practically anything. The next ten years will almost certainly provide a perspective which will condemn these charades as shameful.
12 November 2010 9:12AM
The new gold pegged currency standard which will soon be implemented means more auserity measures for the poor.There is no choice as developing countries are abandoning the fiat paper currencies.
The fiscal policies of the insane bankers to pump excess dollars into their economies are feeble attempts to foist their debts onto the rest of the world.
The IMF is the enemy of poor but not for much longer,hyperinflation is coming !
12 November 2010 9:18AM
How does QE2 fit into the scheme of avoiding a currency war?
12 November 2010 9:19AM
@shinsei do you believe in Santa Claus as well?.......yes of course I read the article but I certainly don't believe everything that is written as you obviously do!
12 November 2010 9:20AM
This is a serious question.
Give me some alternatives to capitalism, e.g. where will the capital come from to support the businesses that will provide the milllions of jobs. Will it be like communism, everything state owned?
I'm not being a Tory troll - I'm seriously interested in the answers.
12 November 2010 9:24AM
@giveusaclue
The thing I'm interested in is alternatives to growth. Is it possible to have capitalism without growth?
12 November 2010 9:25AM
I saw Cameron on the news last night trying to strut around but looking out of his depth. Quite accurate really. Still, at least he has 'good diction'.
12 November 2010 9:28AM
giveusaclue
Surely the present system - massive subsidy for Too Big Too Fail corporations - is the opposite of Capitalism?
12 November 2010 9:29AM
What a stupid little meeting.
I see it like this - USA is completely incompetent at managing its own finances, thus runs an enormous deficit. China understands that saving money allows investment in the future. USA gets jealous and says, "that's not fair, stop it!".
I wish they would stop meddling in others' affairs.
12 November 2010 9:31AM
giveusaclue
In short, i would like top see proper capitalism and democracy restored. I'm fed up of living in an oligarchy. Anyone who claims otherwise is seriously unacquainted with the facts.
12 November 2010 9:35AM
In the immortal words of Mandy Rice-Davies: ''Well he would, wouldn't he.''
The trade-war has already begun.
12 November 2010 9:36AM
butteredballs - A public spirited sentiment which I applaud. However, just like communism and socialism didn't / don't work when applied in real life, capatalism is excellent in theory but liable to influence from those with pernicious intentions when applied.
12 November 2010 9:37AM
HarryKipper's got it spot on! Why would countries like china and India want to buy products made in the UK and US when their own products are so much cheaper. The western rich elites have just spent 20 odd years sending all OUR jobs overseas to increase their personal profits at the expense of normal people's jobs.
NOW they want us to believe they champions of western manufacturing!!
What complete crap they're treating us like the idiots we have become!
wake up and kick these elites into touch. They seem to have forgotten that it was the western working classes who saved their rancid asses from fascism only 60 years ago.
12 November 2010 9:45AM
This is all to do with flying pigs and how you train them.You believe that and this problem is crystal clear.
12 November 2010 9:46AM
giveusaclue
You put a very important and deeply serious point. If not capitalism, then what? How does the world run?
I think the vast majority of people would accept and support the idea that if you make something and/or provide a service that someone else wants, you profit. That is what makes the world go around. There is no problem in hard work and talent being rewarded - it is essential for societies to operate,
Where the dividing line comes though, is when that basic ideal becomes corrupted - when people or organisations become so powerful they are able to hurt society with unfettered greed. The world made that mistake in the twenties and the collapse and misery led to ruin and war. It is a tragedy we have allowed it to happen again in our time.
Capitalism yes, but with major brakes and controls for the interest of the whole. And there needs to be a safety net for those who fall. Capitalism can get away with much but cannot run free, shedding wider societal responsibilities. In Britain and many other countries we have crossed that line of unacceptability, which is why so many people are so angry.
You can be rich and powerful, just take out the greed and exploitation. Profit yes, bigger profit at all costs, no.
12 November 2010 9:47AM
There is no currency war, it's classic pathological western government 'Newspeak'; "blame the yellow peril for all our ills", how fukcin convenient. Was it Chinese or Asian banks that brought down the world economy temporarily? I wish the mainstream media wouldn't be so compliant and universally stupid. All these problems lie at the USA's administrations door..
Other than the fact that China probably feel stiffed holding trillions worth of worthless US treasury bonds, that get de-valued to minus worthless every time the US Fed cranks up the magic money machine, they've done nothing *wrong*. The US and the UK are now humbled to the point of asking China for a bailout (by any other name) for our sick economies...
Watching Obama and Call me Dave behave like cheap double glazing salesmen is funny if it wasn't so tragic...(BTW, I've met some great double glazing saleman that'd come back with better orders than that pair of chumps)
12 November 2010 9:50AM
Quote from Chris Hedges:
'Wall Street’s looting of the Treasury, the curtailing of our civil liberties, the millions of fraudulent foreclosures, the long-term unemployment, the bankruptcies from medical bills, the endless wars in the Middle East and the amassing of trillions in debt that can never be repaid are pushing us toward a Hobbesian world of internal collapse. Being nice and moderate will not help. These are corporate forces that are intent on reconfiguring the United States into a system of neofeudalism. These corporate forces will not be halted by funny signs, comics dressed up like Captain America or nice words.'
and this applies to this country and Europe.
12 November 2010 10:07AM
giveusaclue:
Not undemocratic communism. Properly regulated capitalism.
The capital will come from savings (mainly pension money) and profits.
The Chinese and Indians have enough work to do manufacturing stuff for themselves. Our standard of living does not depend on them making stuff a few percent cheaper than we can make it for ourselves, once you factor in all the other costs such as state support for the unemployed that capitalism relies upon, and the loss of tax revenue from businesses moving abroad.
You are probably confusing capitalism - the relentless and ruthless pursuit of ever increasing profits - with running a viable business such as the local greengrocer, the John Lewis Partnership or the Co-op.
There's a big difference but capitalists love to pretend they're the same, and due to the capitalist press, people believe them.
Unlike Nick Clegg, capitalists don't change their minds. They just keep on spinning.
12 November 2010 10:09AM
I suppose that if the rest of the world had simply rolled over and gave in to the demands, and they were demands, then this summit would have been hailed as a GREAT SUCCESS. It would, indeed, have been a great success, but not for the "west" in general, but for a certain small group of western based multinational corporations.
Looking over the various "crisis" that have periodically hit the world from time to time we can see a very definate trend which is simply this - certain vested interests have, over many decades, managed to have thier will imposed on the rest of the world. Thier limited short term goals ensured that severe problems were ceratin to arise.
So, well done to those countries that resisted the pressure to willy-nilly adopt measures that clearly were not in thier interests just because the wealthy west demanded it of them!!!
12 November 2010 10:11AM
The banking system, fractional reserve banking, should be nationalised and soon. There is no recovery just what the first bailout provided. Soon that money will have been used up by these banking cartels. The insane ideas of Von Hayek, a weird austrian noble whose ideas were based upon nothing more than his opinions seem still to be the current political bible for all. Thatcherism, Reaganism then neo liberals, Blair, Brown all seem to be in thrall to the big banks and multinational cartels. Interestingly I have always wondered how a right wing patriot like Thathcer led the biggest industrial hollowing out of the democratic constitutional monarchy that is Britain in its entire history to invest in a communist state. Cmeron going to China to ask teh EU to let more Chinese products in must be mad . China is already flooding the west with good. As for the UK...all I can say is .where are the jobs..........where are the jobs?
12 November 2010 10:12AM
harrykipper:
Why don't you deal with the point I made rather than make silly comments about Santa Claus.
I think the West would love to see the yuan appreciate by 20%. You seem to disagree. Why ?
12 November 2010 10:16AM
well what did you expect when you outsource all your jobs out to another country? The idea that Western leaders think that the Chinese should shoot themselves in the foot and reduce their massive excess of hard cash is ludicrous. Fuck Wall Street and The City. It is THIER constant drive for higher and higher profits and "shareholder" returns that forced companies to outsource out anyway.
So what do we see now? Chinese companies stealing plans from factories and making clones of designs from the West. Money that SHOULD have stayed in the UK and been spent in the UK, thus driving our economy, say in banks in China and India.
Personally, if I was the Premier of China, I would tell Obama and Cameron to piss off. As someone said above, this is doublespeak to try to blame the chinese for our problems, when the reality is, it is a situation created by Wall Street and The City.
I would DARE Obama to devalue the Dollar and see what the Chinese do with thier stocks of it
12 November 2010 10:17AM
giveusaclue:
BTW Communism almost worked in the USSR. In 20 years they dragged themselves up from peasanthood to become a major fighting force against Hitler. If they hadn't lost 20m lives in that war, then things might have turned out rather well.
12 November 2010 10:17AM
US government must take responsibly for their own mess. It is a shame for US government to print so much US dollars and try to steal wealth from the rest of world. Somebody in this website try to stop us. We will continue to speak out. We are not going to be intimidated by that.
The whole world is upset at US government for its irresponsible behavior. US government is the most selfish government on earth we ever see. US doesn't have moral authority to lead the whole world.
12 November 2010 10:20AM
@ shinsei
http://swampbubbles.com/marcy-kaptur-trans-america-highway-and-nafta
12 November 2010 10:21AM
graham666:
Is this a serious question ?
Because the Chinese and Indians don't make BMWs, photolithography machines for semiconductor manufacture, RollsRoyce Trent 600 jet engines, £8,000 bottles of Chateau Lafitte and Stella McCartney frocks.
Nor do they have an investment management or insurance industries, global legal or management consultancy industries and their film industries are barely the size of the gross revenues of Avatar or a couple of Harry Potter films.
12 November 2010 10:27AM
@shinsei
are you writing this nonsense from China then?
12 November 2010 10:29AM
There's "currency war" 100% of the time, 24 hr per day, 365 days per year, but now the corrupt Brazilian finance minister makes the loud I-know-better latin voice and it's news..., it's highly irresponsible doing that, heating for nothing when the poor in your country is dying starved while watching private jets.
12 November 2010 10:34AM
harrykipper:
You have a very one-sided approach to looking at trade flows.
For every American company that might benefit from cheaper manufacturing overseas there is another American company or two that would benefit from China being richer and purchasing more American products.
Currently the overall balance is all in favour of the yuan appreciating and the Chinese buying more western products.
All the obvious low-value added manufacturing industries were outsourced to China twenty years ago.
12 November 2010 10:43AM
@ shinsei
this idea being pushed and peddled by congress in the US and now here in the UK sounds convincing and obviously is meant to pull the wool over our eyes but it is total nonsense and a ruse to make us believe in our economy growing....the economy looks good on paper as a result as it helps the big corporations get richer but behind the scenes there is another picture of high unemployment, poverty and foreclosures......nice try though!
12 November 2010 10:54AM
Seems like a dubious scenario. Unless the revaluation were a suicidal several hundred percent, it would simply mean jobs were outsourced somewhere else -- India, Mexico... No advantage there...
... unless to western corporations - who presumably own more of India and Mexico, and pretty well the entire rest of the world, than they do of China. The price of Mexican-made rubbish could be raised if the cost of Chinese-made rubbish went up because of revaluation.
...or unless there are plans afoot to put people on JSA to work, making ipads and (with Christmas coming) cordless drills...
At £65 a week they'd just about be competitive with Chinese labour.
12 November 2010 11:09AM
Further analysis: http://www.soundsandcolours.com/articles/brazil/brazils-currency-wars-a-real-problem/
12 November 2010 11:12AM
The US will eventually be forced to dump the dollar and unify with Canada and Mexico into the North American Union, then issue an new currency: the Amero. China's plan to dominate the world by their currency manipulation and gigantic infrastructure investments will be derailed. China, by their death embrace of America (record trade imbalance combined with gigantic Treasury Bill holdings) will be exploited in a jujitsu move by the US to dominate China. We are the meanest and baddest in the world!
12 November 2010 11:17AM
Buff-Hoon
Once upon a time we had it. Cottage industry brought about stable communities that produced the immediate necessities of life. The Industrial Revolution destroyed these communities and workers were herded into huge factories, in return for which they were paid wages that could not keep body and soul together. The surplus of production that resulted was exported and large fortunes were made. Anyone who protested was either hanged, transported or imprisoned. Hello to the start of Global Capitalism!
There can be fewer frightening prospects than rampant globalisation aided and abetted by the present liberal idiotocracy. Fortunately, we may yet be saved by the impending fossil fuel crisis which is coming on us like an express train, as yet unseen in the mist.
12 November 2010 11:20AM
Not only jobs, but also KNOW-HOW developped over decades and although not only by engineers and scientist, but very often on ideas of workers on the job.
12 November 2010 11:21AM
amusing so many people disagreeing with Shinsei, given he's one of about 5 people that that what they are talking about on these boards...
12 November 2010 11:22AM
The real imbalances are between the rich and the poor, within countries and between countries.
12 November 2010 11:22AM
Not yet.
12 November 2010 11:23AM
not any time soon, either...
12 November 2010 11:24AM
Harrykipper
After your quote I visited the Chris Hedges site. Really interesting stuff. Cheers.
JW