In the run-up to the event, much of the spirit of co-operation that characterised the immediate aftermath of the ‘credit crunch’ two years ago appeared to have evaporated. While the USA was under pressure for running a massive trade deficit and devaluing its currency through quantitative easing, China was being similarly pressured for holding its currency at an artificially-low level.
Following talks at the summit in Seoul, South Korea, the leaders agreed to avoid ‘competitive devaluation’ and also pledged to come up with ‘indicative guidelines’ on how to correct distortions in currency and trade.
While it is to be welcomed that the heads of state at least agree on the problem, reaching a solution will not be easy. One of the biggest issues in the weakness of China’s currency, the yuan, which critics say gives the country’s exporters an unfair advantage as well as allowing the country to amass huge foreign reserves.
China has responded that it will allow the yuan to gradually appreciate, but only when global economic conditions are right. Proposals for a four per cent limit on deficits or surpluses were blocked by China and Germany – the two biggest exporters in the G20.
While other countries’ concern at the Chinese position is understandable, it is difficult to criticise them for holding their currency down when other countries, such as the USA and UK, have effectively done the same through interest rate cuts and quantitative easing.
While the immediate threat of a currency war may have receded, this issue may crop up again in future as countries’ put their own interests ahead of those of the global economy. However, the fact that governments at least recognise such an outcome would not be desirable is positive news.
[ add comment ] ( 5 views ) | permalink |
( 2.9 / 288 )Now here’s an offer you can’t refuse. Writing in the Daily Telegraph today, Lord Young, David Cameron’s enterprise adviser, says he would like to hear - first-hand - from as many people as possible who are working in small firms.
He says: “To that end, I will be touring the country, and am working on ways to help anyone reach me with their ideas.” Let’s hope he isn’t trampled in the rush of entrepreneurs wanting to tell it like it is.
Lord Young certainly seems to be singing from the same hymn sheet as small and medium-sized enterprises up and down the country who are the lifeblood pulsing through the British economy and helped to deliver national prosperity.
The new enterprise “tsar” comes from a background in small business and he understands the issues these enterprises face.
He also understands that over recent years, they have faced obstacle after obstacle. Now his goal is to make government more small-business friendly and encourage the birth and growth of new firms.
Three cheers for that, we say. Lord Young starts his article with a frank admission that he has no power in his “tsar” role. What he does have is the ear of the Prime Minister and the sooner he starts talking, the better.
For more information, visit www.glazers.co.uk
[ add comment ] ( 6 views ) | permalink |
( 3 / 280 )
Random Entry
