The value of the yuan was sidestepped in the communique wrapping up the weekend summit of G20 leaders. China insisted that it wasn’t mentioned, so it wasn’t. The closest the communique got was some lilly-livered language asserting that market-oriented foreign exchange rates reflecting fundamentals help sustain global stability. We love mom and apple pie, too. While the subject was certainly discussed, the main split at the meeting was between the U.S. and Europe over the question of stimulus versus deficit reduction. We don’t belittle the matter. Getting the timing right country by country for scaling back on stimulus spending to promote recovery and embarking on what will be painful fiscal consolidation is central to the sustainability of the next cycle of global growth. But as the global financial crisis passes the G20’s limits as a global economic policy coordinator are being shown up more and more. And that may ease pressure on Beijing to revalue the currency on anything but its own timetable.
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