At G-20, U.S. Eyes Economic Imbalances
MADELEINE BRAND, host:
Earlier today, before protests erupted, we spoke with NPR economics correspondent John Ydstie and White House correspondent Scott Horsley about the focus of the summit. This is the third time the G-20 has come together since the economic crisis went global a year ago. With the economic picture slowly improving, this summit is about making sure a crisis like this never happens again. For the Obama administration, the key issue is doing something to address the big imbalances in the world economy, basically, the huge trade deficits the U.S. runs with China and other countries.
I began our conversation with Scott Horsley and asked him to go through the main issues on the summit agenda.
SCOTT HORSLEY: Because the economic situation has improved, the discussion is not so much about jumpstarting a disabled car, but just maybe putting in some safety belts so that you head off future crises or at least make them less painful. They're talking about bank regulation, capital requirements, maybe restricting bankers' pay, and, as you say, the imbalances where the U.S. doesn't save enough and spends too much and other countries do the opposite. The U.S. is saying our consumers can no longer be the only thing keeping global cash registers ringing. Other countries need to depend more on their own domestic markets.
BRAND: And I guess you're speaking mainly of China there, Scott. And John, China, I assume, views the problem differently in terms of trade imbalances and what caused the global financial crisis.
JOHN YDSTIE: That's absolutely right. The Chinese don't agree that their big trade surpluses and the excess profits that they made and then recycled in the United States was a big contributor to the crisis. They blame unregulated risk-taking in the United States. That said, their trade surplus is going down and they boosted domestic consumption for their people. But that's partly a product of this crisis. That said, they'd like to keep doing it because they are interested in the well-being of their people. What the Chinese don't want is to be held to any specific goals or timetables to get their economy in balance. They want to have the option of boosting exports to create growth if they have to.
And Germany feels the same way. Germany is the world's biggest exporter - you may be surprised to know that - and it is not ready to agree to these targets for cutting its export surplus for the same political reasons as China. They want to be able to create growth in their country.
HORSLEY: And, in fact, German Chancellor Angela Merkel has been one of the most outspoken proponents of bank regulation. And she said very explicitly she doesn't want to see that issue shoved to the back burner by a focus on this global imbalance issue.
BRAND: And John, how tense is it between the U.S. and China in terms of trade, and how is that going to affect the discussions?
YDSTIE: Well, of course, there is trade tension between the two countries. The U.S., last week, put a big tariff on tires imported from China, because the U.S. said there was a spike in imports. And now, the unions want to put extra tariffs on some specialized paper products that have been coming into the United States from China in very large amounts. I think the president and Chinese leader Hu Jintao had a conversation about this in New York at the U.N. General Assembly. I don't think it's going to come up around the table here at the summit.
HORSLEY: I think that's right. The Obama administration has really tried to downplay any dispute over the tire tariffs. The president has said he's confident he can avoid having this turn into a broader trade war. But, you know, trade has been a balancing act for President Obama ever since the primary with other Democrats last year. A lot of Americans are skeptical of free trade, they're supportive of tariffs, and President Obama has to keep at least one eye on public opinion here at home. And, you know, that's true of most, if not all the G-20 leaders here. And because those domestic audiences all have their own concerns, that's why it can be so challenging to reach a consensus especially when you don't have the economic crisis gun pointed at your head.
BRAND: That's White House correspondent Scott Horsley along with NPR economic correspondent John Ydstie, both covering the G-20 Summit in Pittsburgh. Thank you both very much.
YDSTIE: You're very welcome.
HORSLEY: My pleasure.