China Daily Exclusive

'Spirit of unity' prevails at summit

By Li Xing, Wu Chong and Ding Qingfen (China Daily)
Updated: 2010-06-29 09:10

As to stimulus exit, the declaration recognized the different approaches that countries would take according to their needs. It uses the euphemism "growth friendly" fiscal consolidation to try to make sure that no drastic budget cuts hurt economic recovery.

"There is a risk that synchronized fiscal adjustment across several major economies could adversely impact the recovery," the declaration said.

"We need to take a longer-term perspective and shift the focus of the G20 from coordinating stimulus measures to coordinating growth, from addressing short-term contingencies to promoting long-term governance and from passive response to proactive planning," Chinese President Hu Jintao said in his address.

The US clearly is also worried. "We can't all rush to the exit at the same time," Obama told the press, adding that countries that have surpluses should think about how to contribute to growth and boost demand.

The declaration called for measures including enhancing social safety nets, pushing for corporate governance reform, developing financial markets and spending on building infrastructure, as well as "greater exchange rate flexibility in some emerging markets".

To address the global economic imbalance, the declaration follows the prescriptions of most leading economists such as Nouriel Roubini that advanced deficit countries should save more and increase their export competitiveness while surplus economies should shift their economic growth model from reliance on exports to boosting domestic consumption.

China has repeatedly expressed its concerns over increased trade protectionism.

The leaders agreed to extend the Washington "standstill" for another three years, requiring countries to refrain from introducing new protectionist measures.

All participating economies agree that the G20 summit is now the primary forum for international economic cooperation, with the leaders celebrating the world's fast and massive response to the worst global financial crisis since the Great Depression in 1929.

Related readings:  Toronto recovering from G20 chaos  G20 leaders promise to keep markets open to trade  G20 commits to deficit reduction time line  Experts favor gradual stimulus exit

"We've brought ourselves back from the brink and begun to move forward with economic recovery," US President Barack Obama said.

However, leaders acknowledged that "the recovery is uneven and fragile, unemployment in many countries remains at unacceptable levels and the social impact of the crisis is still widely felt".

The International Monetary Fund and World Bank each issued an assessment report in which they stated that the world would do better if economies continue reforms to achieve sound finances, rebalance global demand and strictly regulate their financial systems.

That is, "the global output would be higher by $4 trillion; tens of millions more jobs would be created; even more people would be lifted out of poverty; and global imbalances would be significantly reduced", the declaration said.