U.S. and Europe Share Common Interests at G-20 Summit

Published in Xin Jing Bao
(China) on 29 June 2010
by Wang Ying (link to originallink to original)
Translated from by Yalin Yuan. Edited by Stefanie Carignan.
The fourth G-20 summit just ended on June 27th. The summit has issued its G-20 Toronto Summit Declaration. The leaders emphasized that they would take the next step to promote the full recovery of the world economy.

The summit has departed from its tradition of acting in unity during the decision-making process. Instead, this time it is allowing member countries to take action based on their specific situations and take measures that are “differentiated and tailored to national circumstances.” The root cause for the change is that countries are recovering from the crisis, but the paces of recovery differ. Countries hold different chips, and every country emphasizes its own special interests. In this case, it’s much more difficult for countries to work in unity, and it’s impossible for the Toronto summit to produce a unified prescription. Of course, through this summit, the stimulus withdrawal plan is temporarily suppressed — although the suppression is just some politicians’ oral declaration and the effects remain to be seen.

Speaking of differences, at the G-20 summit, the biggest difference is decidedly between the U.S. and Europe. The U.S. is busy getting out of the crisis, while Europe is trying to rebuild confidence. On the surface, the game between the U.S. and Europe is the competition between “spending” and “saving." However, when the former wants to continue with the economic stimulus plan but the latter tries to cut the financial incentives budget, it is like diamond cutting diamond and there is no result. In fact, behind the differences, there is a common concern: Europe hopes to express its determination to get rid of the debt spiral, but the U.S. wants investors to see that it still has irreplaceable leadership in the world. In other words, both Europe and the U.S. want to rebuild or strengthen their financial and economic credibility.

Strictly speaking, that European countries are reducing deficit is not a proactive strategy, but a passive response. But this is not withdrawing either. As the debt has “compound interests,” any debt-reconstructing brought by delay would become a greater burden in the future. A fundamental solution to the debt problem is to reduce the deficit and to “save.” But coupled with the reduction in fiscal expenditures is the decline of domestic demand. The sharp depreciation of the euro has raised the competitiveness of European goods, which would increase external needs.

The appearance of a sovereign debt crisis means that the government is no longer able to boost economic growth by creating demand out of thin air. Originally, the eurozone had a rough balance of trade, but now it seeks a trade surplus, which is bad news for both the U.S. and China. The U.S. itself has high debts, and more unfortunately, the average maturity of existing debt is very short — only four years — and it is therefore very difficult for the U.S. to dilute the debt with moderate inflation. The U.S. also needs to expand its exports and compete for external demand.

Different from investment, consumer demand cannot be increased overnight. When it’s difficult to make a bigger cake, the only thing that matters is how to distribute the cake. In the short term, it is expected that countries with large exports could reduce their exports and further open their domestic markets. China, as the country with the biggest trade surplus, is the best provider of “new external demand.” Therefore, it’s easier for the U.S. and Europe to have common aspirations when it comes to sustainable global economic recovery. To boost economic growth by enlarging exports moves the core from sustainable global economic growth to balanced global economic growth.

China announced that it would restart the exchange rate reform before the Toronto Summit, and this has significantly reduced the pressure on the RMB exchange rate at the summit. However, with decreased growth rate of domestic investment and a more competitive environment for external demand, China can only stand limited appreciation of the RMB. It is predictable that the U.S. and Europe would make more concerted efforts on the RMB exchange rate and further enlarge China’s imports and market. There is still a long way to go to prevent trade protectionism worldwide.


G20峰会,美欧在人民币汇率问题上仍有利益共同点
作者:王莹(上海 学者)
第四次二十国集团领导人峰会27日落下帷幕。会议发表了《二十国集团多伦多峰会宣言》,与会领导人强调采取下一步行动,推动世界经济全面复苏。
本次峰会一改过去三年危机时期统一行事的决策方式,允许各国按各自具体情况行动,采取“差异化和量身定制”的举措。其根本原因在于,各国从危机中渐次复苏、且复苏步调大相径庭,由此也导致了各国持有的筹码并不匹配,各国自然都强调自身特殊利益,再想形成集体行动的难度显著加大,这就使得多伦多峰会不可能开出统一的药方。当然,通过本次峰会,此前多个国家一直蠢蠢欲动的刺激政策退出计划,暂时被压制住了———虽然政策退出的暂缓,目前还停留于部分政治家的口头宣言、落实效果有待观察。
说起分歧,在G20峰会中,分歧最大的无疑是美国和欧洲。美国忙于尽快走出危机,而欧洲重在重塑信心。表面上看,美欧之间的博弈,是“花钱”与“省钱”的对决。当前者主张的继续跟进经济刺激计划遇上后者主张的削减财政刺激预算,自然是针尖对麦芒,毫无结果。分歧的背后其实有着共同的关注:欧洲希望借此表达摆脱债务漩涡的决心,而美国,则希望全世界投资者看到美国依然具备无可取代的领导地位。换言之,欧美都希望重塑或巩固自身的经济金融信誉。
从严格意义上讲,欧洲各国削减赤字,不是一种主动战略,而是一种被动应对,也不能看做是一种“退出”。由于债务具有“利滚利”特征,任何拖延式的债务重组都会带来未来更大的债务负担,若想从根本上缩减债务,削减赤字进行“节流”是个不错的选择。但是,与财政支出削减相伴的,将是欧洲内部需求的萎缩,而由于欧元的大幅贬值,变相提高了欧洲商品的出口竞争力,由此将带来欧洲的外部需求的上升。
主权债务危机的出现,意味着政府再也没有能力凭空创造需求来提振经济增长。原本欧元区是一个大致贸易平衡者,现在它则希望转变为一个贸易顺差者,这对于美国和中国都不是一个好消息。由于美国本身也存在高债务问题,更不幸的是,美国现有债务平均到期日非常短,平均只有4年,这意味着美国很难采用温和通胀来逐渐稀释债务,美国同样需要通过扩大出口和争夺外部需求。
和投资不同,消费需求并不能在一夜之间增加,当蛋糕难以做大的时候,就只能惦记着怎么分配。短期内,往往只能希望那些出口规模庞大的国家减少出口并更多地开放国内市场———作为全球最大的贸易盈余国,中国自然是“新增外部需求”的最佳提供者。于是,对于美欧来说,在全球经济可持续复苏问题上,更容易形成共同诉求,如何通过扩大出口来推动经济增长,这就使得问题的核心由全球经济可持续增长转移到全球经济平衡增长上来。
由于中国在多伦多峰会召开前宣布重启汇率改革,这使得在多伦多峰会上针对人民币汇率问题的施压显著减轻。然而,在国内投资增速下降及外需竞争更加激烈的背景下,今年下半年中国可以承受的人民币升值幅度有限。可以预见的是,未来美欧在人民币汇率问题上,会比以往任何时候都更加团结,在敦促中国扩大进口和市场开放方面,也将比任何时候都更加齐心协力。在全球范围内防范贸易保护主义的努力依然任重道远。
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