Now is the time for the Leaders of the G20 to both to recommit themselves and deliver on the ambitious reform objectives and agenda we have already agreed to and to explore cooperative approaches to meeting our common goals.
The 5-member steering committee (Canada, South Korea, UK, US and France, representing past, present and future presidents of the G20) released a letter to all G20 leaders. Why this letter has just been released is not totally clear. The strong suspicion is that efforts to meet the deadlines set for G20 countries in past Leaders statements may not be ‘going all that well’. There was even a view expressed in the FT by Chris Giles and Alan Beattie (“China Reprimanded by G20 leaders,” FT, (March 30, 2010) that the letter was a “coded rebuke to China on Tuesday against backsliding on economic agreements.”
But the deadlines are approaching for reform. These leaders urge,
… in a spirit of enlightened self interest, [G20 countries] continue to work together to ensure that our fiscal, monetary, foreign exchange, trade and structural policies are collectively consistent with strong, sustainable and balanced growth. It is in the interests of each country and each region to contribute to these objectives through better cooperation with the global community.
The challenges abound to deal with global imbalances. These imbalances require concerted attention by national authorities with serious – and difficult – international coordination. And as we’ve seen there is strong push back by some countries – notably China with respect to the renminbi-dollar exchange rate. It is clear that renminbi revaluation does not resolve the global imbalances problem. But if the Chinese leadership refuses to engage in a larger rebalancing effort – as a result of the renminbi peg – then it will be difficult to craft a collaborative global policy.
This is just one of the issues in this macroeconomic coordination effort. The chickens are coming home to roost.