GYEONGJU, South Korea — The US pressed emerging nations on Friday to set targets to reduce their vast trade surpluses with the West, a plan that could see their currencies rise, as a global finance summit fumbled for ways to reduce tensions that threaten to escalate into a trade war.
US Treasury Secretary Timothy Geithner's proposals, outlined in a letter to the Group of 20 major developed and emerging nations, met with immediate resistance on the opening day of a two-day meeting of top finance officials. Japan's Finance Minister Yoshihiko Noda on Friday called the idea of targets "unrealistic."
The gathering of G-20 finance ministers and central bank governors in the South Korean city of Gyeongju comes just two weeks after their meeting in Washington failed to iron out currency differences that have led to fears of a trade war that could trigger another economic downturn.
In such a scenario, countries devalue their currencies to gain a competitive advantage in a world economy that has yet to fully recover from the global financial meltdown two years ago. Trade barriers are erected in response, hitting international commerce and sending the economic recovery into reverse.