Currency Reform

Germany to reject current account limits at G20

(Xinhua)
Updated: 2010-11-11 11:28

BERLIN - German Chancellor Angela Merkel said on Wednesday that Germany will not agree on setting limits on current account surplus, which is a key issue to be discussed at G20 summit in Seoul, South Korea.

"Germany will not accept quantitative targets," Merkel said at a news conference before leaving, as "competitiveness of countries must be considered on the issue of exports."

Last month the US treasury secretary Timothy Geithner urged to limit a country's trade imbalance below 4 percent of its GDP over the next few years.

However, as the largest exporter in the world after China, Germany's trade surplus has reached 6 percent of its GDP, according to the International Monetary Fund.

Merkel also asked for leaders of G20 to restart the last stage of the Doha round of trade talks and warned the danger of protectionism against the sustainable world recovery.

"The biggest threat for sustainable growth at present is coming from protectionism in its different forms," she said.

She also signalled her intention to discuss exist strategies from current stimulus programs at G20 saying "nobody wants to see new bubbles," and Europe should not "bear single side adjustment."

German Finance Minister Wolfgang Schaeuble was also present at the press conference. He will accompany Merkel to Seoul.

He weakened his criticism against the US recent decision of buying back 600 billion US dollar worth of government bonds a few days ago, saying a strong US is in the interest of Germany and Germany will try its best to help the US instead of having conflicts.

Just before Merkel leaving, a key economic report issued by the German government's economic council, so called "five wise men" added more ammunition to Merkel at G20.

The report predicted German economy will see 3.7 percent of increase this year and 2.2 percent next year.

The report backed Merkel's current policies on strengthening international financial regulations and domestic fiscal consolidation plan, saying they can support a "a stable but flat future growth."

It also showed that German domestic consumption has began to catch up with the exports in supporting the whole economy, which can ease Merkel in facing those criticism against German exports that cause world trade imbalance.