China likely to address concerns over yuan, Obama says By Michael Kitchen and Chris Oliver, MarketWatch HONG KONG (MarketWatch) — A joint communiqué from the Group of 20 major economies Friday called for letting the market set foreign-exchange rates, avoiding intentional devaluations, and setting up a system to avoid current-account imbalances. The statement, issued as the Seoul summit of G-20 leaders concluded, said the bloc would focus on “moving toward more market-determined exchange-rate systems, enhancing exchange-rate flexibility to reflect underlying economic fundamentals, and refraining from competitive devaluation of currencies.” As expected, the statement also laid out a plan to even out nations’ current accounts, though with much of the details to be worked out later. The G-20 called for “reducing excessive imbalances and maintaining current-account imbalances at sustainable levels,” assigning the International Monetary Fund the task of helping develop “indicative guidelines” toward this goal. However, the document didn’t elaborate on how such guidelines would be enforced. The communiqué said the proposed guidelines would be discussed by G-20 finance ministers and central bankers in the first half of 2011, with the first assessment to take place “in due course” next year. Australian Prime Minister Julia Gillard said Friday that the G-20’s statement “outlined a clear path in 2011 to addressing global imbalances,” according to comments cited in a report by Dow Jones Newswires. Gillard said she had pushed for a clear timetable for further negotiations on the issue. “I didn’t want to leave this summit with ‘diplomatease’ that had no sense of time in it,” she told reporters during a press briefing at the closing of the summit. Push for Doha trade talks Similarly, the communique’s language that 2011 will be a “critical window of opportunity” to conclude the Doha round of world trade talks is meant to signal to negotiators that an “end game” is approaching, she said. IMF Managing Director Dominique Strauss-Kahn referred to the commitments in the communiqué as “a step in the right direction,” adding that the challenge was to foster the global economic recovery and create jobs. The G-20 deserved credit for cooperation that helped avert a second Great Depression during the financial crisis that reached a crescendo two years ago, he said. “We will continue to explore ways to refine the global framework needed to cope with shocks of a systemic nature,” Strauss-Kahn said, noting the IMF stood ready to increase monitoring, according to a statement Friday. Controversy had surrounded this year’s leaders’ summit — particularly in terms of China’s foreign-exchange policy and the latest U.S. moves regarding monetary easing. Speaking after the release of the communiqué, President Barack Obama said that he had discussed the yuan issue with Chinese counterpart Hu Jintao and that he believed Beijing will address concerns that its currency is too cheap. However, Obama also kept up the rhetorical pressure, saying that “China spends an enormous amount of money in the market to keep [the yuan] undervalued.” U.S. policy has also come under criticism, as some nations criticized the Federal Reserve’s new round of monetary easing, saying it will further drive down the value of the dollar. Earlier Friday, however, Canadian Prime Minister Stephen Harper became one of the few leaders to defend the Fed’s easing, saying that “in the short term, [it's] the only option available.” See report on Harper’s comments about U.S. Fed policy.

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