Wordy but little action likely

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It's naive to believe that a two-day meeting can save the world economy from faltering.

That may be true, but hopes invariably ride high when the leaders of the 20 most powerful economies in the world gather in one room to talk.

That was the case when the Group of 20 met in Seoul for its first summit in Asia. The meeting, which concluded on Friday, was long on words and short on action. The outcome disappointed those who believe that the world economy can't emerge from its current crisis if nations don't act in concert to redress problems that interconnect the global economic order.

The G20 leaders did set vague "indicative guidelines" to measure imbalances among their varied economies at different stages of development and speed but left the details to be discussed next year, allowing time to temper some of the strains and schisms that have been building up in recent months.

Market-driven rates

In the final communiqu?? capping the fifth meeting of the G20 since the world financial crisis erupted in 2008, Chinese President Hu Jintao, United States President Barack Obama and the 18 members of the elite economic club vowed to move toward market-driven exchange rates and shun "competitive devaluations."

The G20 also agreed to allow "carefully designed" control measures for emerging markets struggling to contain the huge capital inflows coming into their countries. Those countries blame the US policy of further "quantitative easing," which pushed down the value of the dollar and drove money offshore looking for higher rates of return.

The leaders also agreed that there was a critical, but narrow, window of opportunity to conclude the long-elusive Doha round of trade liberalization talks launched in 2001.

The bland promises to deal with trade imbalances did not appear weighty enough to bring about any real transformation in the global economic order.

"There is no good reason to think that any country will actually do anything different as a result of the commitments made at the summit," Julian Jessop, chief economist with Capital Economics, was quoted by Reuters as saying in his note.

The International Monetary Fund has warned that gaps between cash-rich exporting nations and debt-laden importers are widening to pre-crisis levels.

However, Obama tried to sound an upbeat note.

"The work that we do here is not always going to seem dramatic," Obama told a news conference after the summit. "It's not always going to be immediately world-changing. But step by step we're building stronger international mechanisms and institutions that will help stabilize the economy, ensure economic growth and reduce some tensions."

Markets, of course, prefer action to words. They want to see the world's biggest economies moving to resolve growing currency rifts, defuse trade tensions and prevent a double-dip recession.

"China is unlikely to ditch its policy of gradualism," said Ben Simpfendorfer, Royal Bank of Scotland's economist in China. "Neither is the G20 a likely forum for abrupt change."

"A few months ago, China was under pressure from both developed and developing governments to allow larger yuan gains," he said. "But the tables have since turned, and the US now finds itself facing pressure owing to its new quantitative easing."

The Federal Reserve's new US$600 billion round of quantitative easing, announced a week ahead of the Seoul summit, angered many G20 nations, including China, Brazil and Germany. They accused the US of trying to weaken the dollar to boost US exports, ignoring the global repercussions the policy is likely to provoke.

The US, meanwhile, has long been badgering China to allow the yuan to rise faster, accusing China of keeping the currency artificially low to help its export sector.

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