The world's leading economies have agreed on ways to measure dangerous global economic imbalances, but they acceded to China's demand to drop its world-leading foreign cash reserves as one of the standards.
Finance chiefs of 20 dominant and emerging economies crafted the agreement in Paris on Saturday after all-night negotiations. They are hoping to prevent another global economic crisis like the financial meltdown that occurred in 2008.
The G20 summit negotiations were stymied by China, now the world's second largest economy after the United States. The Chinese balked at including their $2.5 trillion in foreign exchange reserves as one of the measuring sticks of global economic health. The U.S. and some other Western nations have charged that China has kept its yuan currency weak in order to boost its exports, leading to huge Chinese trade surpluses.
The finance chiefs agreed to consider such factors as governmental debt and budget deficit levels, private savings and debt, trade balances and net economic investments as ways to measure the health of the world economy.
French Finance Minister Christine Lagarde described the discussions at the two-day meeting as "frank, sometimes tense."
Analysts say it is unclear how effective the new standards might prove. The financial leaders did not set numerical standards to define possible economic danger signals. They could discuss such numerical standards at meetings later this year. Those discussions also are likely to be as contentious as the Paris talks, with the world's economies growing or declining at such different paces that their individual interests in setting global standards vary widely.
In becoming a world economic power, China has often been at odds with other, more mature economies.
With its robust growth, China has become a global investor. It has become the biggest purchaser of U.S. government securities, as well as helping finance some of the debt-ridden European governments and investing in industrial operations in South Asia, Africa and elsewhere.
But it has steadfastly resisted repeated Western demands to let the value of its yuan currency increase. That would make China's exported products more expensive overseas and likely cut China's vast surpluses with its trading partners. With an increase in the yuan's value, export products produced in the U.S. and elsewhere would be more evenly priced with those of China, making them more attractive on the world market.
Some information for this report was provided by AP, AFP and Reuters.
