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China reprimanded by G20 leaders, Financial Times

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China reprimanded by G20 leaders, Financial Times

By Chris Giles in London and Alan Beattie in Washington

Published: March 30 2010 19:05 | Last updated: March 30 2010 19:05

Five prominent members of the Group of 20 leading economies, including the US and UK, sent a coded rebuke to China on Tuesday against backsliding on economic agreements.

In a letter to the rest of the G20 that shows frustration at slow progress this year, the leaders warned: “Without co-operative action to make the necessary adjustments to achieve [strong and sustainable growth], the risk of future crises and low growth remain.”

G20 officials said the letter – signed by Stephen Harper and Lee Myung-bak, the Canadian and South Korean leaders who will chair the group’s two summits this year, Barack Obama, US president, Gordon Brown, UK prime minister, and Nicolas Sarkozy, French president – was an attempt to restore flagging momentum to the international process.

Ottawa and Seoul are concerned that the G20 summits they will host, in June and November respectively, might fail to live up to expectations.

In a move that will irritate China, the five leaders specifically raised the issue of exchange rates in relation to reducing trade imbalances, a topic the G20 avoided in 2009 to help secure agreement at the London and Pittsburgh summits.

“We need to design co-operative strategies and work together to ensure that our fiscal, monetary, foreign exchange, trade and structural policies are collectively consistent with strong, sustainable and balanced growth,” the letter said.

It has been released in the middle of an intense debate in Washington about how the White House should confront Beijing over the perceived strength of the renminbi. Some lawmakers are ratcheting up calls for China to be designated a currency manipulator in a forthcoming report.

Charles Schumer, the third most senior Democrat in the Senate, this week again advocated a bill that would allow the US to include estimates of currency misalignment when calculating anti-subsidy duties to be imposed on imports.

As well as refusing to budge on its currency, China has been obstructing the G20 process this year. It has hampered efforts by the International Monetary Fund to issue a report which Dominique Strauss-Kahn, managing director, told the Financial Times in January would conclude that national strategies for growth around the world “will not add up”.

The leaders’ letter makes reference to the slow progress of this process, urging all G20 members to “move quickly” to “report robustly on what each of us can do to contribute to strong sustainable and balanced global growth”.

The letter also sounded a warning note over the so-called Doha round of global trade talks, which is at a virtual standstill after the collapse of negotiations in 2008.

“With regard to Doha, we need to determine whether we can achieve the greater level of ambition necessary to make an agreement feasible,” the letter said.

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