Deputies clutching mobile phones to their ears shuttled in
and out of a hall as they tried to draft a final statement, to be released on
Friday, but remained far apart on pivotal issues including currency exchange
rates, G20 spokesman Kim Yoon Kyung said.
“We had to open the door because the debate was so animated
and the room was getting hot,” he said.
An Indian official close to the negotiations said
discussions on reducing current account imbalances were “picking up” after a
rocky start.
Group of 20 leaders had hoped this week’s gathering, the
fifth since the financial crisis exploded in 2008, would mark the beginning of
a new era of global cooperation. Hosts South Korea printed banners proclaiming
a slogan of “Shared Growth Beyond Crisis.”
But the unity forged in crisis has given way to diverging
national policies that reflect a multi-speed recovery from the recession,
prompting critics to question the effectiveness of the G20 grouping itself.
Most major economies are grappling with sub-par growth,
leaving them reliant on exports, while emerging powers such as China and Brazil
have roared back to pre-recession strength.
China’s politically contentious trade surplus widened to
$27.1 billion in October, more than economists had expected, according to trade
figures released on Wednesday. US trade figures, due later on Wednesday, were
expected to show a wide gap for September. “The US numbers today should be
interesting — if there is a wider deficit with Beijing, it is sure to step up
the pressure on yuan appreciation arguments,” said Suresh Kumar Ramanathan,
strategist at CIMB bank in Kuala Lumpur.
Stubbornly slow growth in the developed world has fueled
concern that governments around the world will compete for the stagnating
exports market by weakening their currencies.
The US Federal Reserve’s decision last week to spend another
$600 billion buying government bonds has drawn reproaches from four continents
and intensified the G20 debate over how best to bolster the recovery and avoid
another financial crisis.
Critics charge that the Fed ignored global repercussions —
namely a weaker dollar and a flood of cheap cash that could find its way into
emerging markets — and violated the cooperative spirit the G20 has worked hard
to preserve.
The criticism has made it harder for Washington to press
China to allow its yuan currency to rise faster, a central issue in the global
rebalancing effort.
Underlining that, a Chinese official who has been helping
draft the G20 communique said the leaders should not discuss the yuan or any
other currency specifically. The Indian official said the final statement would
not single out any currency.
However, the yuan rose to a high of 6.6353 against the
dollar in the spot market on Wednesday, the highest level since the currency’s
revaluation in July 2005, after the People’s Bank of China fixed a record yuan
mid-point.
Beijing typically loosens its tight grip on the yuan as a
goodwill gesture ahead of political events that apply pressure on China for
more yuan appreciation.
The United States got some support from close ally Britain.
Finance Minister George Osborne said a strong US economy was in the best
interest of Asia and the world, echoing comments from President Barack Obama,
who was due to arrive in Seoul later on Wednesday.
Kim, the G20 spokesman, said 40 to 50 deputies were crammed
into a small room for a 14-hour session on Tuesday, and voices were raised when
they discussed a framework for balanced growth that G20 leaders hope will be a
cornerstone of the summit.
UN Secretary-General Ban Ki-moon urged greater G20
cooperation at a “critical moment” for the world economy. “This is a time for
unity,” he told a news conference in Seoul.
Officials left empty spaces in several sections of what will
become the final communique, he said, an acknowledgement they had yet to agree
on the language. They reconvened on Wednesday and will continue into Thursday
if necessary.
Security was tight in Seoul, with police and armed forces on
high alert, but there have been no big demonstrations so far. Two small
protests, against a free trade deal with the United States, and tax reform in
South Korea, were staged on Wednesday morning.
Despite little early progress, G20 negotiators voiced
confidence that their leaders would see eye to eye by the end of the summit.
“You always start with disagreement and end up with a
consensus,” said one Chinese official.
