World leaders are struggling to regain the sense of purpose that drove their determined response to the worst financial crisis in decades as they head to economic summits in Asia this week.
Forged in the heat of a banking meltdown two years ago, summits of the Group of 20 advanced and emerging economies have turned their attention to the slower-burning problem of imbalances that bedevil global growth. Talk of a "currency war," when countries jostle for trade advantage by massaging their exchange rates lower, has diminished since G20 finance ministers last month vowed to avoid forex one-upmanship.
But US President Barack Obama, weakened by a mid-term electoral drubbing last week, and other leaders must still flesh out a ministerial vow to limit surpluses and deficits in current accounts - the broadest measure of trade. Heading into the fifth G20 summit this Thursday and Friday in South Korea, China lashed out at a US proposal to set a current account ceiling - the suggested range being plus or minus four percent of gross domestic product.
"We believe a discussion about a current account target misses the whole point," Vice Foreign Minister Cui Tiankai, China's top negotiator on G20 issues, said last week. "If you look at the global economy, there are many issues that merit more attention - for example, the question of quantitative easing," he said.
There has been grumbling worldwide after the Federal Reserve said it would pump an extra 600 billion dollars into the fragile US economy, in a radical policy approach known as "quantitative easing". Emerging economies worry that much of the new US money will flood their financial markets, driving their currencies still higher against the dollar and Chinese yuan to the detriment of their exports.
Brazilian Finance Minister Guido Mantega said the Fed's response was no better than "throwing money from a helicopter". Germany is also unhappy. Obama is scheduled to meet Chinese President Hu Jintao in Seoul, but there is no sign of a breakthrough to resolve US allegations that China cheats in world trade by artificially weakening its currency.
Revving up its export-driven rise, China is motoring along as America stages a painfully slow recovery from recession and struggles to create jobs - worsening a toxic political brew for Obama. After the G20, the tensions will linger into a weekend summit in Japan of the 21-member Asia-Pacific Economic Cooperation (APEC) forum.
While APEC finance ministers on Saturday agreed to curtail "excessive" trade imbalances, many Asian governments are anxious about being squeezed if the United States turns inward and China grows even more assertive. At the APEC talks in Kyoto, US Treasury Secretary Timothy Geithner conceded that numerical targets for the imbalances were a tough sell, but also warned that distortions in world trade could "threaten future financial stability".
By striving to limit China's hefty trade surplus, which is on track to reach 180 billion dollars this year, Geithner is groping for an indirect way of encouraging a yuan revaluation. But the South Koreans, who are laying on a 50,000-strong security deployment, are minimising expectations as they prepare to hand the G20's presidency over to France after this week's summit.
President Lee Myung-Bak says he is counting on "peer pressure" in Seoul rather than legally binding obligations. "There is a common understanding that if we do not work among ourselves, we fear we will return to protectionist measures," he told the Wall Street Journal.
The G20 leaders are expected to task the International Monetary Fund with monitoring any deal they strike on current accounts. The IMF is meanwhile undergoing the biggest shift in its 65-year history under a G20 agreement to grant the fast-growing "BRIC" nations, Brazil, Russia, India and China, a greater say in its running.
But the squabbling over trade is fuelling criticism that the G20 is running adrift, after winning plaudits for shoring up the world economy at its first summit in November 2008. London-based Capital Economics warned that "without tangible commitments from the major surplus countries, a lurch towards protectionism and a global trade war would be even more likely"