Finance ministers of the world's major economies reached a fudged accord on Saturday on how to measure global economic imbalances after China prevented the use of exchange rates and currency reserves as indicators.
French Finance Minister Christine Lagarde, who chaired the Group of 20 talks, said the deal nevertheless represented a significant step towards better coordination of economic policies worldwide to help prevent another financial crisis.
"The negotiations were frank, sometimes tense, and led to a final compromise which cannot attribute to any one delegation but which I can say represents a spirit of compromise and of ambition," she told a news conference.
Ministers and central bank governors agreed on a list of indicators including public debts and fiscal deficits, private savings and private debt, the trade balance and other components of the balance of payments such as net investment flows.
But at Chinese insistence there was no mention of the real effective exchange rate or foreign currency reserves.
"Reserves have been dropped," Lagarde said, adding that the deal included a mechanism to take account of exchange rates when assessing the overall balance of payments.
The United States and other western countries accuse China of keeping the yuan artificially undervalued to boost its exports and accumulate massive foreign currency reserves that they say distort the world economy.
US Treasury Secretary Timothy Geithner repeated after the talks that China's currency "remains substantially undervalued" and its real exchange rate had not moved much despite its slow appreciation since a reform last June.
"There is broad consensus that the major economies, not just Europe, Japan and the United States but also the large emerging economies, need to allow their exchange rates to adjust in response to market forces," he said.
The world's number two economy, which overtook Japan this week, has resisted Western pressure to substantially revalue its currency to help rebalance global growth.
China's trade surplus has shrunk of late, perhaps explaining why it prefers that measure.
No specific goals
Lagarde said the indicators were not binding targets but would lead to the drafting of guidelines for coordinated economic policies to reduce distortions, and then to a mutual assessment process.
Germany, Europe's biggest exporter, which has resisted US efforts to set numerical target range for current account deficits, said there would be no specific goals set for certain indicators.
French President Nicolas Sarkozy, who holds the G20 presidency this year, urged ministers on Friday not to get bogged down by the indicators dispute and welcomed the fact that China had agreed to host a seminar on reforming the
international monetary system in Shenzhen in late March.
France has also run into opposition with its two other G20 priorities -- greater transparency and regulation of commodities prices and reform of the international monetary system.
China and Brazil complained that "hot money" inflows risk destabilising the economies of emerging countries, pointing the finger at the U.S. Federal Reserve's money printing via a $600 billion bond purchase programme.
The G20 communique said ministers agreed to work on strengthening the international monetary system to help avoid disruptive fluctuations in capital flows and disorderly movements in exchange rates.
With world shares at 30-month highs, investors seem content for the G20 to take its time, whereas at the height of the crisis two years ago markets were baying for policy action.