Geithner was rebuffed at the outset when his counterparts from countries ranging from Germany to Japan, from India to Russia, poured cold water on his proposal for restricting current accounts surpluses to 4 percent of gross domestic product (GDP). In other words, he wanted every country to promise that the net balance from trade, transfers of money from abroad, and interest and dividend payments would remain within that band.
The purpose of that proposal was to restrain China, whose current accounts surplus is nearly 5 percent of its GDP, and Germany, with a surplus of approximately 6 percent, from overwhelming markets with exports while taking far fewer imports. The US by contrast is running a current accounts deficit of 3.2 percent, third highest among G20 nations after Turkey and South Africa.
Geithner showed no sign of defeat, or even disappointment.
“We found agreement that we have to set thresholds," he told reporters here. “We found a lot of support.”
His concern about China was clear, however.
“[Those countries] that have traditionally run large trade and current account surpluses [must get away] from export dependence [and move] toward stronger domestic demand-led growth,” he said, meaning that countries like China should focus on selling their products at home rather than abroad.