SEOUL, South Korea — The Group of 20 major economies took initial steps to address imbalances in the global economy on Friday. But they did not act as assertively as President Obama had hoped, and he left little doubt that he considered one country, China, the primary source of the problem.
Scrapping a longtime practice of speaking with diplomatic caution about China’s currency policy, Mr. Obama accused Beijing of intervening aggressively to keep its currency, the renminbi, below its market value to promote exports. He said it was a mistake for nations to think that “their path to prosperity is paved simply with exports to the United States.”
“Precisely because of China’s success, it’s very important that it act in a responsible fashion internationally,” Mr. Obama said at a news conference at the conclusion of the economic summit meeting here. “And the issue of the renminbi 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.”
Though his own Treasury Department, like those of prior administrations, has certified that China is not a “currency manipulator,” a designation that can prompt Congressional trade action, Mr. Obama appeared to remove the remaining wiggle room he had on the subject of the renminbi, declaring: “It is undervalued. And China spends enormous amounts of money intervening in the market to keep it undervalued.”
The tougher language seems likely to add tension with China, which has already sharply criticized the Obama administration’s decision to try to mediate territorial disputes involving China and its East and Southeast Asian neighbors.
But Mr. Obama’s efforts to persuade China to act on its own, or as part of a collective commitment by big economies to address trade imbalances, have yielded only incremental steps, raising the possibility of a contentious and awkward prelude to a state visit to Washington by President Hu Jintao of China scheduled for January.
Under heavy American pressure, the leaders of the Group of 20 economies did agree Friday to curb “persistently large imbalances” in trade, as well as saving and spending, that officials believe pose risks to global growth. The group’s communiqué reflected an emerging consensus that longstanding economic patterns — in particular, the United States’ consuming too much and big exporters like China and Germany consuming too little — were no longer sustainable.
But the uneasy compromise fell short of initial American demands for numerical targets on trade surpluses and deficits, and left most of the work to monitor and address such imbalances for future meetings. “Instead of hitting home runs, sometimes we’re going to hit singles,” Mr. Obama said. “But they’re really important singles.”
Mr. Obama acknowledged that the agreement “doesn’t provide an enforcement mechanism,” but said it “does give the international community the ability to monitor and see exactly what countries are doing” and “gives a mechanism to apply at least some peer pressure” on countries treating their trading partners unfairly.
The cautious approach reflected, according to several officials from the Group of 20 powers, the concerns of China, which resisted setting any kind of timetable for currency appreciation, and Germany, which insisted that the problem involved fiscal, monetary and other policies, not just trade.
The leaders did, however, agree to “move toward market-determined exchange-rate systems,” to avoid trade and currency wars and to coordinate their policies.
Mr. Hu said that the Chinese economy would shift toward domestic consumption and that the government would make it a priority to increase domestic demand, as the United States and many economists have urged.
Mr. Obama said that China’s shift toward higher consumption and a stronger currency would occur “in a gradual fashion.” He said he hoped that Mr. Hu’s visit to Washington in January would yield additional progress.
The declaration the Group of 20 leaders agreed upon was largely based on an agreement that finance ministers, including Treasury Secretary Timothy F. Geithner, hammered out last month at a meeting in Kyongju, South Korea. But it added a timetable.
The finance ministers are to agree by next June on “indicative guidelines” for “timely identification” of big, enduring imbalances that “require preventive and corrective actions to be taken.”
Using those guidelines, the International Monetary Fund will then conduct an analysis of the causes and consequences of the imbalances by the next Group of 20 leaders’ meeting, to be held in France late next year.
Technical and watered-down as it was, the language on imbalances was the most contentious element of the 22-page joint statement by the leaders. It was completed only after days of negotiation by the leaders’ representatives that stretched into early Friday, hours before the leaders approved the deal.
“In Seoul, there was too much jostling over currencies, deficits and exports for the Group of 20 leaders to make any significant breakthroughs,” said David Shorr of the Stanley Foundation, a nonprofit organization that advocates international cooperation and monitors the Group of 20. “But there was also enough concern to avert a disastrous breakdown.”
Expectations for the meeting had been low, particularly after officials from China, Germany, Brazil and other nations accused the Federal Reserve of weakening the dollar to support the sluggish American recovery.
The meeting did, however, yield substantial agreements in other areas. The leaders endorsed an encompassing new round of bank capital standards known as Basel III, called for a conclusion to the long-delayed Doha round of world trade talks and declared that development of poorer countries mattered not only for social justice, but for the bottom-line goal of raising global demand to sustain the recovery.
The leaders also backed a broader role for the International Monetary Fund, in addition to having it examine the imbalances.
They ratified changes in the fund’s governance that will expand representation of emerging markets, and supported the expansion of lending programs for countries facing a sudden liquidity crunch.
President Obama suggested that the controversy over currencies and trade sometimes obscured those accomplishments.
“Naturally there’s an instinct to focus on the disagreements, because otherwise, these summits might not be very exciting — it’s just a bunch of world leaders sitting around intervening,” he said, adding that “in each of these successive summits we’ve actually made real progress.”
Other leaders offered similar, if mild, praise.
“Not heroic, but good and steady progress,” said the British prime minister, David Cameron.
José Manuel Barroso, president of the European Commission, said the outcome was “a quantum leap in terms of global economic governance,” given the refusal of some countries even to discuss imbalances two years ago.
Su-Hyun Lee and Mark McDonald contributed reporting.
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