A global agreement to tackle economic imbalances and fend off the prospect of damaging currency devaluations looked set to evade finance officials at the G20 meeting in South Korea.
G20 finance officials started their formal meetings yesterday with nations from the developing world and Japan dismissing US proposals to set limits on current account balances in an effort to defuse tensions over currencies that economists fear could trigger trade wars.
“We need to talk about it first, but numerical targets are unrealistic,” Japanese Finance Minister Yoshihiko Noda said.
PHOTO: REUTERS
Several emerging market -policymakers are loath to allow their currencies to appreciate substantially and blame the US for financial mismanagement that led to the global financial crisis and accuse it of engaging in its own devaluation by flooding markets with liquidity from its quantitative easing policies.
That has had the effect of pushing a wall of money into emerging markets like Brazil, forcing them to adopt a range of measures to stem capital flows which have boosted asset prices and complicated fiscal and monetary policy.
While the G20 won praise for coordination of stimulus packages during the global financial crisis, such a sense of unity has gradually evaporated in the face of strains -resulting from unprecedented efforts to revive global growth.
It appears increasingly unlikely that any meaningful agreements at the summit will be reached aside from a commitment to a development agenda for poorer nations that has been backed by hosts South Korea and a framework for financial regulation.
Washington’s proposal to set a 4 percent target for current account surpluses and deficits, a measure that appeared aimed at China’s huge trade surplus, were torpedoed by both developing and advanced nations.
“One thing is clear: The final agreement on this framework agreement [on economic stability] will not be made at the finance ministers’ meeting,” Russian finance official Andrey Bokarev said ahead of the meetings. “There is an action plan, but there are an awful lot of complaints, proposals.”
Failure to reach a global agreement has been priced into financial markets, although any hardening of the tone of the final communique, due today, could bolster emerging market currencies at the expense of the dollar.
The language of the last G20 summit stressed the need to “refrain from competitive devaluations” and a shift to something stronger wording such as “refraining from competitive undervaluation” would be a significant move, Credit Suisse currency strategist Olivier Desbarres said.
“You would have to commit to allowing your currency to appreciate,” he said.
That would require a steep change for some countries.
Policymakers said that while the likes of China, India and Germany would probably reject the ambitious US proposals for numerical targets, the negotiations had a long way to run.
“The actual drafting of the communique will only begin Friday night after the first round of meetings between the finance ministers and central bank governors,” a senior emerging market policymaker present at the talks said on Thursday.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last