TOPWRAP 8-China open to G20 talks on new economic balance
(For a TAKE A LOOK on the G20 summit, click on [ID:nLH78576])
* China gives qualified support to U.S. imbalances plan
* EU unveils plan for pan-European banking supervision
* U.S., India wants strong G20 stance vs. protectionism
* Obama has blunt message for world at U.N. (Edits, adds diplomats' late-night talks)
PITTSBURGH, Sept 23 (Reuters) - A U.S. drive to build amore balanced global economy gained the qualified support ofChina on Wednesday in a sign that Group of 20 leaders may beready to take joint action to prevent future economic crises.
U.S. President Barack Obama and other leaders of the G20major developed and developing countries are due to meet inPittsburgh on Thursday and Friday, with restoring economicgrowth and rewriting the rules of finance high on the agenda.
Central to the summit -- the third since the collapse ofthe Lehman Brothers investment bank a year ago -- will be aU.S. plan to correct the imbalances in the world economy byshrinking surpluses in big exporting countries like China andboosting savings in debt-laden nations that include the UnitedStates.
Obama wants a framework of "mutual assessment" whereby theInternational Monetary Fund makes policy recommendations onrebalancing to the G20 every six months.
Analysts believe Obama's plan will meet resistance fromBeijing should it pose any risk to China's export-driveneconomic growth. So far, China is sounding engaged.
"We approve of countries strengthening their macroeconomicpolicy coordination and together pushing forward thesustainable and balanced development of the world economy,"China's Foreign Ministry said.
China sounded much less sure about concrete coordinatedpolicy action, saying advice from international financialbodies should be for reference only. [ID:nPEK328341]
A senior Obama administration official said China hadwarmed to the rebalancing proposal. "I think there has been asignificant evolution in their thinking about this issue overthe course of the (economic) crisis," he said. [ID:nN2353686]
Rebalancing the world economy, by getting Chinese consumersto spend more for example, would take a monumental effort.[ID:nHKG175047]
China's private consumption equals little more than a thirdof its economy. In the United States and Britain, consumptionaccounted for nearly three-quarters of the economy in boomtimes. By contrast, Chinese and Indian households last yearsaved about 40 percent and 32 percent of their disposableincomes. The U.S. savings rate was just 3.2 percent.
As a possible sweetener for backing the plan, the UnitedStates is offering developing countries a greater role atinternational bodies like the IMF.
Investors will look for hints at the summit as to howquickly the United States and Europe will wind down hugeemergency stimulus programs without risking a new recession.
Diplomats were working into the night to narrow differencesbefore leaders arrive on Thursday in Pittsburgh, a once grimysteel town chosen by Obama to host the summit in recognition ofits growing transformation into a high-tech center.
GERMAN COOLNESS
Europe also has concerns about the U.S. rebalancing plan.Germany, the world's biggest exporter of goods last year,signaled some coolness to the idea, with a government spokesmansaying Berlin wanted to focus on financial market regulation.
European Commission President Jose Manuel Barroso worriedthe G20 might hold too much sway over the global economy.
Barroso told Reuters that "reinforcement should not be doneat the cost of existing institutions that have specific, well-established mandates like the IMF, or even the World Bank. Wecannot dilute the IMF's position." [ID:nLN664651]
Also on the summit table are proposals to rework the rulesof global finance so banks, and bankers, take fewer risks.
The European Union unveiled a blueprint for a bankingsuper-watchdog and a pan-European supervisor that it hopes canbe replicated on the global stage. [ID:nLN578070][ID:nN23542085]
The EU said the watchdog could overrule states such asBritain, which is fighting to keep control over the centerpieceof its economy, the City of London financial center.
"Our aim is to protect European taxpayers from a repeat ofthe dark days of autumn 2008, when governments had to pourbillions of euros into the banks," Barroso said.
The rules to reform the financial industry -- widely blamedfor causing the economic slump -- need approval by the 27 EUnational governments and the European Parliament.
But the sense of urgency with which the global reform drivewas launched a year ago is fizzling as economies recover.
The Pittsburgh meetings are the first major summit hostedby Obama and he is under pressure to produce results on a slewof foreign policy problems.
On Wednesday, he issued a blunt message to world leaders athis U.N. debut, saying other countries must shoulder a largerburden in tackling international crises. [ID:nN23399559]
"Those who used to chastise America for acting alone in theworld cannot now stand by and wait for America to solve theworld's problems alone," Obama said. "Now is the time for allof us to take our share of responsibility."
Europe also wants a deal on executive pay, a message pushedon Wednesday by French President Nicolas Sarkozy.[ID:nPAB007912]
"We clearly want a ceiling on the amount of bonuses, forexample, as a percentage of their revenues, as a part of theircapital, and that's what we're talking about at this moment,"the French president said in a television interview.
The senior U.S. official said progress had been made onpay: "I think we're narrowing our differences."
He doubted currency issues would feature prominently in G20discussions, when asked about French concerns about thestrength of the euro.
TRADE, GLOBAL WARMING ALSO ON AGENDA
Also up for discussion will be reforms to the IMF, tradepolicy and global warming before a crucial round ofnegotiations on climate change in December.
G20 finance ministers earlier this month made littleprogress on how much industrial nations should contribute tohelp developing nations deal with global warming.
The United States is pressing G20 partners to phase outsubsidies for fossil fuels, a proposal likely to be resisted bycountries such as China and India. [ID:nN23376208]
India's prime minister called for a strong warning againsttrade protectionism as he set out for Pittsburgh.[ID:nSP491621]
Activists from environmental group Greenpeace rappelled offone of Pittsburgh's bridges with a banner displaying themessage: "Danger. Climate Destruction Ahead. Reduce CO2Emissions Now."
Protest groups planned marches on the summit site. Concretebarriers were in place outside the PNC Financial Services Group(PNC.N) building, suggested by anti-capitalist protesters as atarget for rallies on Friday, along with other companies suchas Starbucks (SBUX.O) and McDonald's (MCD.N). (Additional reporting from Reuters bureaus worldwide; Writingby Mark Potter and Steve Holland; Editing by John O'Callaghanand Frances Kerry)
Source: Reuters
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