G20 talks focus on policy clarity, China offers olive branch
Draft communique will urge China to encourage domestic demand-driven growth
Ministers will review the text over dinner.
The BRICS emerging markets caucus - Brazil, Russia, India, China and South Africa - also met today. They were unlikely to progress on joint steps, such as a shared pool of forex reserves, to guard against capital flight.
The United States is beating its fiscal targets thanks to improving growth and Washington is putting increasing pressure on Europe to do more to foster growth.
Germany, in contrast, is seeking internationally agreed medium-term debt reduction goals.
G20 labour ministers held a joint session with finance ministers, putting the jobs crisis in Europe - where youth unemployment is above 50 percent in debt-strapped Greece and Spain - at the centre of the debate.
“We will maintain supportive macroeconomic environments, which are conducive to job creation, investment and business development, in order to allow the private sector to play its role as a driver of employment and growth,” the ministers said in a statement afterwards.
The European Union’s employment commissioner, Laszlo Andor, told Reuters investment in jobs was vital for maintaining social peace and emerging from years of austerity.
“If in the name of competitiveness and internal devaluation you just compress wages constantly, you also kill demand and you can kill the recovery,” Andor said.
The G20 released a tax action plan drawn up by the Organisation for Economic Co-operation and Development (OECD) that said the existing system didn’t work, especially when it came to taxing companies that trade online.
The tax plan is one of the major ‘deliverables’ that will go before the summit of G20 leaders being hosted by President Vladimir Putin in St Petersburg in early September.
Russia, the first big emerging nation to host the annual presidency of the G20, finds itself in an awkward political spot.
G20 delegates arriving in Moscow ran into a protest over the jailing of a prominent Russian opposition politician. Alexei Navalny, who organised protests against Mr Putin’s election for a third Kremlin term last year, was sentenced to five years in prison for theft in a case that drew international condemnation.
Mr Navalny was released on bail today pending an appeal.
“The rally and the traffic jams are causing meetings to be postponed,” said one European diplomat. “But we fully understand the democratic right to protest.”