Germany hopeful of deal despite China resistance

Paris: Germany held out hope yesterday for a G20 deal on measuring global economic imbalances despite stiff Chinese opposition.

China rejected plans to use real exchange rates and currency reserves to measure imbalances and said trade figures rather than current account balances should be used to assess economic distortions.

A failure to agree would augur badly for the G20 process.

Late on Friday officials struck an uncertain tone.

"I cannot tell you what will happen. Nobody knows," one G20 official said, adding that China was the only country against the measures.

As ministers from the world's most powerful economies prepared to get down to work, German finance minister, Wolfgang Schaeuble, said they had a "good chance" of breaking the deadlock.

"I think we will reach agreement on which indicators we [use to] measure imbalances in the future, to fight timely mis-developments, to come to a balanced growth," Schaeuble told reporters.

The hardline Chinese stance highlighted splits over how to define economic imbalances and prescribe action to remedy them, a key aim of France's G20 presidency.

Two other G20 sources said negotiators had failed to reach agreement and would leave it up to their finance ministers to try and seal a deal on specifics yesterday.

Even then, agreement was uncertain, they said.

French president Nicolas Sarkozy, who holds the G20 presidency this year, urged ministers on Friday not to get sidetracked by the indicators dispute and welcomed the fact that China had agreed to host a G20 seminar on reforming the international monetary system in Shenzhen in late March.

"I want to avoid your debates getting bogged down in interminable discussion about these indicators, which are distracting us from the essentials," Sarkozy said in a speech. He said a joint approach was the only way forward.

Even if all the yardsticks are agreed, there is no sign of numerical targets even being broached.

France has also run into opposition with its two other G20 priorities — greater transparency and regulation of commodities prices and reform of the international monetary system.