South Korea will seek consensus on a controversial US plan to ease global imbalances at next week's G20 meeting, as the host looks to secure an achievement for the talks, a report said on Saturday.
South Korea is "sounding out" positions of fellow members on the issue in an effort to reach a consensus, the Nikkei newspaper said, citing unnamed sources.
The proposal, initially tabled by US Treasury Secretary Timothy Geithner last month at a G20 forum in South Korea, calls for capping current account surplus and deficits at four per cent of the GDP. China and Germany, with current account surpluses above four per cent, have rejected the idea. But the proposal has resurfaced as China shows no signs of allowing significant appreciation of the yuan, the Nikkei said.
Targeting China's hefty current account surplus would be an indirect way for Washington to cajole Beijing into relaxing its grip on the yuan and allowing the currency to appreciate - a move demanded by key trading partners.
"Although the cap would be voluntary, it would set an 'appropriate' range for surpluses and, the US seems to hope, put China in a position where it would have to revaluate its currency," the Nikkei said. But tough negotiations may lie ahead after the Association of Southeast Asian Nations raised concerns that the measure would lead to trade protectionism, according Thai Finance Minister Korn Chatikavanij.
ASEAN will voice its worries to Geithner Saturday during a meeting of finance officials of the Asia Pacific Economic Cooperation (APEC) forum in Kyoto, Korn told reporters.
The Asian Development Bank's president Haruhiko Kuroda said on Friday that he generally supported the idea but said it needed modifying. He also urged Beijing to make the yuan more flexible, saying it would be good for the Chinese economy