G20 Talks Fiscal Imbalance

The two-day G20 conference is set to start today in Seoul, South Korea. President Obama arrived in the city a day ahead and addressed a press conference about the possible talking points.

China’s trade surplus, one of the more controversial developments of the last few years is bound to be a hotly debated topic. Critics have accused China of keeping its currency artificially low in order to boost exports. In the process, it has amassed huge reserves of foreign exchange and its trade surplus is now $27 billion.

In response, Obama has called for countries to employ measures that would increase domestic demand and decrease an over-reliance on exports to boost their economies, especially in light of the global economic downturn of the last two years. The comments come in response to criticism that the U.S policy of Quantitative Easing (QE) will only lead to further foreign investment and consequently global inflation.

The debate is bound to be an interesting one, but runs the risk of degenerating into a U.S- China squabble over exports.