Business World

Leaders of the world’s biggest countries meet on Thursday to seek ways to nurture the recovery from the worst recession since the 1930s and build safeguards against future catastrophes.

President Barack Obama, hosting his first Group of 20 summit, will lay out a massive agenda that includes tackling one of the thorniest problems facing the global economy — how to even out massive imbalances between export powerhouses such as China and the deeply indebted United States.

The sheer volume of problems the two-day summit is set to address — from the lopsided global growth model to climate change, tougher financial regulation and caps on bankers’ pay — means expectations for any near-term action are low.

European Central Bank Governing Council member Axel Weber said on Thursday he still expected the summit to agree on long-term changes to global financial structures, proving more productive than previous meetings.

“I am happy that G20 leaders and regulators have a broad consensus on the issues and on the agenda,” Weber, who is also the chief of the German central bank, told German radio.

The summit in Pittsburgh, which has seen its own economic hardship as its once mighty steel industry lost out to global competitors, is the third G20 gathering since the collapse of investment bank Lehman Brothers a year ago sparked the global recession.

For Washington, however, the top issue at the summit will be its call for coordinated policies that would reduce the world’s reliance on U.S. consumers by boosting consumption in top exporting countries, while debt-laden nations save more.

DON’T COUNT ON U.S. CONSUMER

U.S. Treasury Secretary Timothy Geithner, who is expected to meet with G20 officials on Thursday, said Americans had to save more, meaning that countries that were counting on U.S. demand to drive their own growth would have to look elsewhere.

“If they learn anything from this crisis, it’s that basic imperative,” he said on Wednesday.

Such rebalancing will take a monumental effort, given that China’s private consumption accounts for little more than a third of its economy, while it exceeds 70 percent in the United States or Britain.

By contrast, China’s households saved about 40 percent of their disposable incomes last year, while the U.S. savings rate was just over 3 percent.

Signs of growing support for the principles of a more balanced world economy and curbs on excessive risk-taking by banks have also yet to translate into agreement on how to achieve those goals.

China, whose $585 billion stimulus package largely focuses on boosting domestic investment and consumption, agreed with the idea of more balanced global economic development and more international cooperation on policies.

But Beijing distanced itself from the U.S. suggestion to make the International Monetary Fund responsible for regular monitoring and policy recommendations to G20 members. 

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