G20 – US accused of planned economy thinking

Finance ministers from the G20 leading economies have just met in South Korea where global imbalances were the major talking point.

The G-20 is made up of the finance ministers and central bank governors of 19 countries:
* Argentina * Australia * Brazil * Canada * China
* France * Germany * India * Indonesia * Italy * Japan
* Mexico * Russia * Saudi Arabia * South Africa
* Republic of Korea * Turkey * United Kingdom * United States of America

US proposals that countries set targets to reduce trade imbalances appeared to be running into opposition. US Treasury Secretary Timothy Geithner wrote to G20 members on Friday suggesting limiting surpluses and deficits to a percentage of output. But Japan, Germany and Russia expressed opposition to what one delegate called “planned economy” thinking.

US officials said the target for trade surpluses and deficits would be 4% of GDP by 2015. China’s current account surplus was 4.9% of GDP in the first half. Japanese Finance Minister Yoshihiko Noda summed up the mood among other big exporters, including Germany, saying Mr Geithner’s proposal was “not realistic”. Australian Treasury Secretary Wayne Swan said he was not sure a “one-size-fits-all” approach could work. Tensions over exchange rates are like to dominate the meeting, being held ahead of a summit by heads of state next month.

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