World leaders must focus on bolstering growth in a global economy still scarred by crisis, Treasury Secretary Timothy Geithner said on Saturday as the heads of the Group of 20 nations gathered in Canada.
Geithner played down the notion of a rift among leaders over how quickly to cut budget deficits, saying even European leaders rushing to tighten spending recognized the importance of reigniting an uneven global recovery.
We have to make sure that people understand that we are going to take the steps necessary to bring down our deficits over time. But we also need to make sure we're growing, he told reporters in Toronto.
That balance is going to differ across countries. But I think you're going to see a strong commitment again by these major economies to do what is necessary to make sure that we are supporting recovery and getting that balance right.
The Obama administration worries that hitting the brakes too abruptly on economic stimulus could risk a repeat of the mistakes that prolonged the Great Depression in the 1930s.
The scars of this crisis are still with us. So, this summit must be fundamentally about growth, he said.
Even as U.S. officials warned about cutting stimulus too quickly, Germany and other European countries fear the threat of spreading contagion from the sovereign debt crisis in Greece and want to reassure markets of their commitment to reining in deficits.
The differences had been highlighted by recent comments from U.S. and European officials on economic priorities. But Geithner said the message from the continent's leaders was about more than just austerity.
You saw in the statements made by a number of European leaders today ... you've seen this in the commitment they're going to make here in Toronto, a basic recognition of the importance of growth, he said.
PRAISE FOR CHINA SHIFT
Geithner praised China's recent move to make its currency more flexible and said its leaders were taking the right steps in trying to reduce reliance on export-led growth.
If you look at what China is doing, growth in China now is much more driven by consumption and domestic demand than it has been in the past, he said.
China announced a week ago it would loosen the peg between its yuan currency and the dollar, which the United States says gives Chinese exports an unfair advantage at the expense of U.S. jobs.
This is an important step toward helping China better meet its own challenges and providing a more level playing field for all its trading partners, he said of the yuan decision.
At many recent G20 meetings, China's export-led economy has been a focus of discussion, with its trading partners concerned it contributes to imbalances in the world economy. Geithner said China was not alone in an overreliance on exports for growth.
Growth started somewhat later in Europe and Japan, is projected be somewhat slower, and is still excessively dependent on exports to the rest of the world, he said.
(Additional reporting by Alister Bull; Editing by Peter Cooney)