China vs US at G-20 Summit

China has dismissed a US proposal to impose current account targets and criticized US monetary policy, undermining hopes that the governments of the World’s 2 largest economies will find common ground at the G-20 Summit in Seoul next week.

Cui Tiankai, a deputy foreign minister and one of China’s lead negotiators at the G-20 Friday said the US plan for limiting current account surpluses and deficits to 4% of gross domestic product harked back “to the days of planned economies” (hahahahaha......). “We believe a discussion about a current account target misses the whole point,” said Mr Cui, in the 1st official comment by senior Chinese officials on the subject.

“If you look at the global economy, there are many issues that merit more attention, for example, the question of Quantitative Easing.”

Tim Geithner, the US Treasury secretary, had proposed using current account targets to accelerate Global re-balancing partly as a way of finding agreement with China which has strongly opposed US pressure for a more rapid appreciation of its currency.

In recent weeks, there had been some hints that China was favorable to the idea. Yi Gang, a deputy central bank governor, said China aimed to reduce its current account surplus to 4% of GDP in the medium-term.