Obama said all G-20 members must work together to create a sustainable global economy. While he said the U.S. must also make changes, his words made it clear that he wanted exporters and surplus nations such as China to take a greater role.
The president conceded that the recovery will not be sustained if “American households stop saving and go back to spending based on borrowing.”
“Yet no one country can achieve our joint objective of a strong, sustainable and balanced recovery on its own,” Obama wrote in a letter to G-20 leaders, dated Tuesday but released on Wednesday.
While the president did not single out China in a letter to other G-20 members, observers have for weeks anticipated an economic showdown when Obama meets with Chinese President Hu Jintao. The two are to meet Thursday in Seoul.
The G-20 is expected to be dominated by concerns over trade and budgetary imbalances between countries like the U.S. that have huge trade and budget deficits, and surplus countries such as China.
The U.S. has long criticized China for keeping the value of its currency pegged to the dollar, which boosts its exports. But the U.S. is now coming under intense criticism for the Federal Reserve’s decision to pump more dollars into the U.S. economy, which might lower the value of the dollar.
Both actions have increased worries of a global currency war that could hamper the world economy.
At the top of the president's list of objectives in dealing with China is urging Hu to let the yuan rise and fall with the rest of the world's currencies, and rebalancing China's surpluses with the U.S.'s trade deficits.
“A rebalancing of the sources of global demand, along with market determination of exchange rates that reverses significant undervaluation, are the best base for the shifts needed to bring about the vigorous and well-balanced recovery that we all want,” Obama wrote.
The president this week defended the Fed’s decision to print more money.