The United States, nursing a hangover from its worst recession since the 1930s, said it was "very confident" the Seoul summit would adopt a declaration promoting a reorientation of trade between surplus and deficit nations.

"There has been big progress," South Korean President Lee Myung-Bak said at the start of Friday's talks, held in a giant convention centre surrounded by a 50,000-strong security deployment.

Officials said the leaders were expected to embrace a beefed-up version of an agreement by G20 finance ministers last month to avoid currency devaluations, rein in trade gaps and resist protectionism.

However, any consensus document that emerges could well be toothless, shorn of US proposals for firm targets on national current accounts, following a fierce counter-offensive from China, Germany and others.

Chinese President Hu Jintao presented his own counter-proposals in Seoul, calling on the United States to adopt "responsible policies" and maintain a stable dollar.

Hu, who presides over the world's second-largest economy and its largest exporter, demanded global resistance to trade barriers as he painted a bleak picture of the economic outlook.

"The international financial markets are volatile, the fluctuation in the major currencies is large, prices of commodities are high, and there is a clear rise in protectionism," he said.

President Barack Obama, having suffered an economy-linked drubbing in US elections last week, says there should be no controversy about fixing imbalances "that helped to contribute to the crisis that we just went through".

But controversy is rife in the G20 after the Federal Reserve instituted a 600-billion-dollar attempt to reflate the US economy, a radical monetary step that foreign critics say will trigger tit-for-tat currency devaluations.

German Chancellor Angela Merkel said a US proposal to limit the current account surpluses of big exporters to four percent of gross domestic product was dead in the water.

Instead, she said, G20 finance ministers will be asked to work with the International Monetary Fund to look at broader, structural economic indicators such as population changes and labour laws.

"The time-frame for this is still very much disputed," she said Thursday, while adding: "I personally don't want to put it off endlessly. I think we will get a common communique in the end -- including the US."

Chinese officials sought to throw the onus back on the United States by arguing that Beijing has an "unswerving" commitment to reform its much-criticised currency regime, but needs stability in the world economy.

The United States wants the G20 to agree to curtail "excessive imbalances" as a back-door way of forcing China to realign its currency, which critics say is kept deliberately cheap to support Chinese exporters.

But the proposal has run into trouble not just from China but from an array of nations including Germany, Europe's export champion, which insists its own trading prowess has nothing to do with any currency chicanery.

"To set political limits on trade surpluses and deficits is neither economically justified nor politically appropriate," Merkel told a G20 business summit.

The United States, accused itself of deliberately depressing the dollar to trade its way back to prosperity, vied to build bridges in Seoul.

A senior US official said Washington was "very encouraged" by China's actions, which have led to a slow rise in the yuan since June.

Confronting US critics head-on, Treasury Secretary Timothy Geithner said the United States would "never" manipulate the dollar and hit back at a surprise attack on Washington's economic approach from former Federal Reserve chairman Alan Greenspan.

But divisions in Seoul were in plain view with China's growing assertiveness in a variety of international fora, including the failed Copenhagen climate summit at the end of last year, again on display.

"China is being very difficult in finalising the texts, so there might be brackets left for the leaders to fill in after all," a German government source said heading into the final sessions of talks.

del.icio.us	Digg	Reddit
YahooMyWeb	Google	Facebook

Memory Foam Mattress Review

SPACE MEDIA NETWORK PROMOTIONS Solar Energy Solutions Tempur-Pedic Mattress Comparison ... Newsletters :: SpaceDaily :: SpaceWar :: TerraDaily :: Energy Daily XML Feeds :: Space News :: Earth News :: War News :: Solar Energy News