US urges unity as G20 heads for trade showdown
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The United States has asked the world's biggest rich and emerging economies to put aside their differences hours before the start of a G20 summit that aims to iron out serious imbalances in global trade.
Struggling to recover from its worst economic woes in decades, the US locked horns with exporting kingpins China and Germany over a plan to rebalance commerce between deficit and surplus countries.
The United States wants the G20 to agree to curtail "excessive imbalances" in world trade as a way of forcing China to realign its currency, which critics say is kept deliberately cheap to support Chinese exporters.
On the back of his midterms elections drubbing, President Barack Obama said his administration wanted to boost growth via "prudent" economic policies.
"It is difficult to do that if we start seeing the huge imbalances redevelop that helped to contribute to the crisis that we just went through," he told a news conference with the summit's host, South Korean President Lee Myung-Bak.
There have been tensions within the G20 after the Federal Reserve instituted a 600-billion-dollar attempt to reflate the US economy.
Some analysts say this could lead to a war of currency devaluations between the US and China.
In Beijing, the National Bureau of Statistics announced that China's consumer inflation was now running at its fastest pace in more than two years.
"The new round of foreign quantitative easing policy will release enormous liquidity, which will have a rather significant impact on the Chinese economy," NBS spokesman Sheng Laiyun said.
Meanwhile, South Korea's President Lee Myang-bak has called on his fellow leaders to use the summit to devise a direction and vision for the global economy.
Earlier protest groups held demonstrations in Seoul over concerns that the G20 summit will fail to address the concerns of ordinary people.
Leading the demonstrations was the Korean confederation of trade unions KCTU.
KCTU international secretary Lee Chang Gyan says the G20 summit is making the man in the street pay for the global financial crisis.
"The G20 summit has failed to regulate the speculative financial capitals," he says. "Austerity measures will undermine social welfare, pensions and education so we strongly condemn the G20 summit for making common people pay for the crisis which is why we are protesting against the summit."
Meanwhile emerging economies are worried that the new Federal Reserve measure will stoke speculative flows of money, with some using capital controls to stem the tide.
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