Treasury Secretary Timothy F. Geithner took direct aim at China on Saturday at a meeting of the world’s most powerful economies, saying that its currency was still “substantially undervalued” and that recent steps taken by Beijing to adjust its value were too small.
Meeting in Paris over the weekend, financial leaders from the Group of 20 agreed on a set of guidelines to identify when economic and financial developments in some countries would create problems for the rest of the world.
The agreement was forged after France and Germany persuaded China to accept a compromise that includes measuring a country’s currency exchange rate as a gauge of the potential problems.
Even though China has allowed its currency, the renminbi, to appreciate against the dollar since last summer, it has not been enough, Mr. Geithner said. As such, the United States and its European partners say, China still retains an unfair edge in trade that is contributing to a two-speed global economy.
Mr. Geithner’s blunt assessment added to a yearlong drumbeat that the United States has led, aiming to push Beijing to let the value of its currency rise and address its trade imbalance, pressure the Chinese have stiffly resisted.
Nevertheless, China did agree to compromise language on the yardsticks measuring imbalances in the global economy.
China had originally tried to quash efforts to gauge imbalances by looking at real exchange rates and currency reserves, which the United States and other Western countries see as having contributed to the financial crisis.
China has accumulated substantial currency reserves in United States dollars, helping it to hold down the value of the renminbi and run up a large trade surplus.
But China, after discussions with France and Germany, agreed to include those elements in the guidelines, although the rules were softened, along with public and private debt levels.
These guidelines are a “first step,” said Christine Lagarde, the finance minister of France, which is leading the G20 this year.
They grew out of concerns that fast growth in China and other emerging markets would stoke inflation and trade imbalances that could destabilize a recovery, even as advanced countries struggle to overcome lagging growth and high unemployment in the wake of a recession.
Unemployment is expected to stay high for the foreseeable future in the United States and Europe as they recover from the downturn.
Dominique Strauss-Kahn, the head of the International Monetary Fund, said that while the financial crisis was over, “the social crisis is still there, and very strong. If you have growth that doesn’t transform into jobs, what does that mean for the man in the street?” he asked.
Jobs and growth are also a major concern in North Africa and the Middle East, where demands for greater democracy and equality have emerged in part from a paucity of economic opportunity, a concern cited by the leaders gathered here in Paris.
Mr. Geithner, citing the “historic events” that have unfolded in North Africa in the last several weeks, said the United States was committed to working with its international partners to secure “a peaceful and orderly transition in Egypt and Tunisia and support the economic reforms necessary to promote broader gains in living standards.”
One of the major factors fanning wide social unrest in the region, he and others said, were high food and commodity prices.
The International Monetary Fund estimates that commodity prices jumped 20 to 30 percent last year, a trend that Mr. Strauss-Kahn said was “creating a lot of problems for low-income countries and vulnerable people.”
In a separate telephone call with a small group of journalists, Robert Zoellick, the president of the World Bank, said, “We’re reaching a danger point” in these countries. He said he urged G20 officials to “put food first in 2011,” even as they bicker over technical ways to measure imbalances in the world economy.
Mr. Geithner said the United States would support measures to limit the potential for the manipulation of commodity prices through greater transparency and oversight of the commodity and derivative markets, which some critics worry are being used by speculators to drive up commodity prices.
Beijing’s currency policy has helped stoke a breakneck pace of growth in China that, together with other emerging markets, has been cited as a contributing factor in the runup in food and commodity prices.
Not surprisingly, each country is pursuing its own self-interest to resolve internal economic problems. These include high unemployment in the United States and difficult austerity measures in Europe, as countries tighten their belts to mend finances.
“It’s very difficult to see any government doing something in its fiscal affairs just to benefit the broader system,” Jacob Frenkel, the chairman of JPMorgan Chase International, said in Paris last week at a meeting of the Institute for International Finance.
Cajoling Beijing, however, is a losing proposition, Mr. Frenkel said, because the Chinese don’t want to be seen as being pushed around.
Instead, he said, governments should tell China they understand why it has a savings glut, “and then say, ‘Let us help you design a system that helps you save less,’ ” he said. “That would be a win-win strategy,” he said.