G20 talks in China to focus on capital flows
Ministers and bankers from the G20 nations are to meet in China Thursday to discuss challenges facing the global monetary system, with talks likely to centre on destabilising capital flows.
French President Nicolas Sarkozy and Chinese Vice Premier Wang Qishan will open the one-day meeting of finance ministers and central bank chiefs from the Group of 20 leading economies in the eastern Chinese city of Nanjing.
US Treasury Secretary Timothy Geithner, International Monetary Fund chief Dominique Strauss-Kahn and OECD secretary-general Angel Gurria will also attend the talks organised by France, which holds the G20's rotating presidency.
The meeting -- which comes as the global recovery faces major hurdles such as Japan's quake-tsunami disaster and the ongoing eurozone debt woes -- aims to hone in on key ways to reform the monetary system.
The day will feature closed-door group sessions on global capital flows -- which emerging economies including China say are fuelling inflation and driving up the value of their currencies -- and a keynote speech from Strauss-Kahn.
Host China has ruled out any discussion of its controversial exchange rate regime, despite ongoing criticism that its yuan is massively undervalued, giving its exporters an unfair trade advantage.
Experts including Nobel prize-winning economist Robert Mundell and Cornell University professor Eswar Prasad, a former head of the IMF's China division, will join the discussions.
Sarkozy said Wednesday he hoped the seminar would spark a debate about "a hugely necessary reform of the international monetary system".
"We must fight against... monetary instability that risks reducing to nothing the competitive efforts that you are all making," the French leader said.
Aides close to Sarkozy have however said that no concrete decisions are expected from the seminar.
At a meeting in Paris in February, the G20 agreed to a set of indicators to measure economic imbalances between surplus exporters such as China and nations with structural deficits such as the United States.
The non-binding indicators gauge internal imbalances, focusing on budget deficits, public debt and private savings.
External indicators, meanwhile, look at the trade balance and investment flows, "taking due consideration of exchange rate, fiscal, monetary and other policies," the G20 has said.
But China, which has the world's largest foreign reserves valued at more than $2.8 trillion, has baulked at many of the indicators amid fears they could result in more pressure over trade and its currency.
In Nanjing, though, such imbalances "will not be at the centre of discussions," one Western diplomat said earlier.
French economy minister Christine Lagarde and her Chinese counterpart Xie Xuren will close the conference.
© 2011 AFP