You don’t have to peel back a very thick layer of agreement at this weekend’s prep meeting in London of finance ministers for the G-20 Pittsburgh summit to see how much difference remains between the U.S., Europe and China. Set aside for the moment the more-or-less consensus on regulation of the banking industry (which will get frayed once national regulators start implementing it in detail). It is in the short- and long-term management of the global economy that the true differences lie.
The U.S., as the recovery laggard, wants stimulus programs to continue worldwide. Europe and China see much of that part of the work of economic recovery done, and are much more ready than the U.S. to talk about how to unwind it. The U.S. also needs the two big export-led economies, China and Germany, to reorient towards domestic consumption and to take on the role America has long played of being the export market of last resort. That will happen neither quickly nor easily.
This weekend’s meeting also ducked the thorny question of how to give China and other developing nations, notably its fellow BRICs, Brazil, Russia and India, greater say in the management of the world economy. April’s G-20 meeting set the start of 2011 as the deadline for proposals to this end. Here the U.S. and China can make common cause: to reduce European nations’ voting power at the International Monetary Fund, suggesting 5% and 7% cuts respectively. Somehow typically, even here they disagree.
