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POLITICAL ECONOMY
China's Hu Jintao in Canada ahead of G20 summit

G20 to warn of 'uneven and fragile' recovery: leaked text
Washington (AFP) June 23, 2010 - Leaders from the group of 20 top economies will warn that the global recovery remains "uneven and fragile" when they meet in Toronto later this week, according to a leaked draft communique. According to the document, obtained by Greenpeace -- an environmental lobby group -- leaders noted a still patchy recovery from the worst economic crisis in a generation. "While growth is returning in many countries, the recovery is uneven and fragile, and unemployment remains at unacceptable levels," the text said. Skirting a contentious issue that has divided Europe and the United States, leaders were to say stimulus spending had helped stabilize the global economy. Washington has urged Europe not to cut government spending before the recovery is assured, for fear of plunging a swathe of the world -- including the United States -- into a double-dip recession.

European nations, led by Germany, France and Britain, argue drastic cuts are needed to put their books in order and create a firm basis for future growth. "Fiscal and monetary stimulus has helped restore private demand and lending, and we have taken strong steps toward increasing the stability of our financial systems," said the largely incomplete text. Leaders were also expected to ask trade ministers to move toward the "endgame" of much-delayed World Trade Organization negotiations. "We instruct our Trade Ministers to prepare a full assessment of the state of the negotiations and a plan of the way forward for our consideration at the Seoul G20 summit in November of this year." They will also push forward with a "voluntary" plan to "identifying inefficient fossil fuel subsidies that encourage wasteful consumption. "We agree to continue working to develop voluntary, member-specific approaches for the rationalization and phase out of such measures."
by Staff Writers
Ottawa (AFP) June 23, 2010
Chinese President Hu Jintao touched down in the Canadian capital Wednesday for a three-day state visit ahead of a G20 summit in Toronto, live television footage showed.

Hu is scheduled to meet Thursday with Prime Minister Stephen Harper to discuss a range of issues of mutual interest and address opportunities to strengthen bilateral ties.

The Chinese leader arrived just hours after a 5.0-magnitude earthquake rattled Ottawa, Montreal and Toronto, prompting evacuations of many downtown office buildings, shattering windows at Ottawa city hall and reportedly damaging stretches of road north of the capital.

On Saturday and Sunday Hu attends the Group of 20 summit of top industrial and emerging economies, where he is expected to address two major issues of international interest: China's policy shift on its currency, which many nations believe is undervalued, and Beijing's stance on North Korea.

A senior US official said Wednesday that President Barack Obama will hold talks with key Asian leaders, including Hu, on the sidelines of the summit.

earlier related report
China's Hu heads to G20 amid pressure over yuan, N.Korea
Beijing (AFP) June 23, 2010 - China's President Hu Jintao left Wednesday for the Group of 20 summit in Canada where he could face new pressure over Beijing's currency controls and world efforts to rein in ally North Korea.

Hu will pay a three-day state visit to Canada before attending the weekend G20 meeting in Toronto, accompanied by central bank head Zhou Xiaochuan, commerce minister Chen Deming and others, the foreign ministry said.

It will be his first international appearance since the central bank at the weekend pledged further reform of the yuan and also comes after a report in May blamed North Korea for the deadly sinking of a South Korean ship.

The People's Bank of China's announcement on the yuan Saturday fuelled expectations that Beijing would loosen its grip on the currency.

However, Beijing has doused hopes for a large revaluation sought by trading partners such as the United States, and Hu could face calls for a further commitment to free up the currency.

World leaders "are going to want more reassurance and more details on what China has in mind", said Patrick Chovanec, an economist at Tsinghua University in Beijing. "They will want reassurances that this is a genuine commitment on China's part."

Critics, especially in the US, say China keeps the yuan undervalued as much as 40 percent to protect exporters, costing Americans jobs.

Members of Congress -- facing mid-term elections in November -- have threatened trade sanctions against China and have pushed for action at the G20.

However, China's foreign ministry warned Tuesday against bringing the yuan up at the G20.

Summit participants should avoid "playing the blame game and imposing pressure" over foreign exchange rates, ministry spokesman Qin Gang said.

The yuan pledge initially was seen as reducing the chances of a G20 clash but China has already triggered renewed complaints by ruling out large swings in the currency or a one-off revaluation.

On Tuesday, Beijing slightly adjusted its tightly controlled yuan trading band to allow the currency to strengthen against the dollar, in the first concrete step to deliver on the flexibility promise.

But on Wednesday it went the other way, setting a weaker trading level.

China has also been under pressure to join efforts to punish North Korea after the rogue communist state was accused of torpedoing the South Korean warship in March, killing 46 seamen.

Seoul and Washington, citing a multinational probe last month that blamed the North, are seeking a UN resolution condemning Pyongyang.

China, however, has refused to denounce North Korea -- which Beijing helps sustain through trade, economic aid and diplomatic support -- issuing only mild calls for restraint and giving no indication it would support UN action.

Experts say China fears siding against Kim Jong-Il's government could destabilise it, potentially leading to regime collapse and a refugee crisis on its doorstep.

China's position "exposes the hypocrisy" of its calls for world peace and good-neighbourliness, security experts Bonnie Glaser and Brad Glosserman wrote in a recent analysis.

This position "will only encourage North Korean provocations and jeopardise the peace and security that China and other nations in Northeast Asia seek".

But China has shown it is not immune to foreign pressure, voting this month for new UN Security Council sanctions on Iran over its nuclear programme.

Western nations suspect Tehran is seeking to develop nuclear weapons, which it denies. China, Iran's key trade ally, had long resisted Western calls to back punishing Tehran, advocating negotiations instead.

Qin would not confirm whether a meeting with US President Barack Obama would take place at the G20 in which Obama could press his demands.

Hu, meanwhile, will likely meet Japan's new Prime Minister Naoto Kan and new British Prime Minister David Cameron for the first time.

Before the summit, Hu will meet Canadian Prime Minister Stephen Harper, Qin said.



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