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G20 rebalancing plan not "blame game": U.S. official

The United States is not targeting specific nations in its G20 proposals to rebalance the world economy and has seen China's thinking on the subject evolve significantly, a U.S. official said on Wednesday.
/ Source: Reuters

The United States is not targeting specific nations in its G20 proposals to rebalance the world economy and has seen China's thinking on the subject evolve significantly, a U.S. official said on Wednesday.

Lessons from the economic crisis have informed negotiations among Group of 20 officials on an agreement to fix imbalances and prevent another global economic crisis from happening, a senior official with knowledge of the talks told Reuters in a telephone interview.

"This is not a blame game. It's not backward looking. It's not designed to single out any country," the official said.

Washington's plan involves shrinking surpluses in big exporting countries such as China and boosting savings in debt-laden nations that include the United States.

The official said China had warmed to the proposals on the back of its experience fighting the economic crisis.

"I think there has been a significant evolution in their thinking about this issue over the course of the crisis," he said, adding that the shift was reflected in China's domestic stimulus efforts and in talks with G20 officials.

The U.S. official said the United States had driven global demand through consumer spending and running current account deficits, but that status may not persist once the economic crisis has faded.

China has bristled at suggestions that a big build-up in its reserves as the U.S. trade deficit swelled contributed to the low interest rates that encouraged investments in riskier assets, paving the way for the financial crisis.

Chinese officials claim that lax regulatory oversight in rich nations was largely to blame for the financial crisis.

China offered qualified support for the U.S. plan on Wednesday though its foreign ministry.

BONUSES, SUBSIDIES, TAX HAVENS

The official spoke broadly about United States' goals at the summit, which President Barack Obama will host in Pittsburgh on Thursday and Friday.

He said progress had been made in talks about executive pay and bonuses.

"I think we're narrowing our differences," he said, noting that disagreements had not been especially wide in the first place. No other country had gone as far as the United States has in addressing the compensation issue, he said.

He said he did not expect currency issues to feature prominently in G20 discussions, when asked about French concerns about the strength of the euro.

"Nothing is off the table," for talks, he said, adding the rebalancing plan would receive the most attention from leaders.

Officials were still working out differences over a U.S. proposal that G20 nations phase out fossil fuel subsidies, he said, while noting that some big countries with such subsidies saw phasing them out as key to their economic recovery plans.

Venezuela, Iran, Russia, India and China are among nations that subsidize fuel to keep prices for consumers low. Russia, India and China are part of the G20.

Washington says doing away with the subsidies would help boost economic growth and fight climate change.

In other G20 business, the official said timetables would be attached to measures related to tax havens agreed earlier in London. Protectionism and the Doha trade round would also be on the agenda for discussion by leaders, he said.