Consensus evades G20 on crisis response

Japan and China today announced fresh economy stimulus plans ahead of the 2 April meeting of the Group of 20 nations in London even as France and Germany have rejected US and British calls for fresh spending.

US president Barack Obama today called for joint action to stem the slide in the global economy.

Japan's prime minister Taro Aso has proposed an additional economic stimulus package, reported to be of the order of $204 billion (20 trillion yen)  to battle the country's deepening recession.

Aso, who sought an extra budget that will include stimulus measures spread out over several years, said he is yet to decide on how to spend the money.

"We should not just do it as a political party alone. Rather we should seek counsel from various people, like scholars," he said.

China, which is also ready to expand its stimulus, is however more worried about its US assets and has appealed to Washington to safeguard the value of its US assets.

China is the largest creditor to the US government.

"We already have our plans ready to tackle even more difficult times, and to do that we have reserved adequate ammunition," premier Wen Jiabao said at a news conference.

Wen, however, did not indicate the size of the stimulus plan or the timing of the announcement. He merely said the stimulus policies can be introduced any time, possibly at an ''early date.''

Beijing has already announced a $586 billion (4 trillion yuan) package to boost growth in the world's third-largest economy.

The US and Europe too are split over the need for more aggressive stimulus as the top priority in attempts to counter the global economic crisis.

France and Germany have rejected US and British calls for fresh spending, while Washington has urged big industrialised countries to spend 2 per cent of their gross domestic product to boost demand and pull the global economy out of its tailspin.

At a news conference with German chancellor Angela Merkel in Berlin on Thursday, French president Nicolas Sarkozy rebuffed US calls to spend more.

"We consider that in Europe we have already invested a lot for the recovery, and that the problem is not about spending more, but putting in place a system of regulation so that the economic and financial catastrophe that the world is seeing does not reproduce itself," Sarkozy said.

Japan, the US and the UK seem to be closer on the issue of giving a fresh boost to the global economy. ''The immediate issues are to stabilise the financial system (and) to get out of the present deflation threat facing the world economy," the Financial Times quoted Japanese finance minister Kaoru Yosano as saying.

"The international community must unite to tackle the downturn and set the path toward a sustainable future," British finance minister Alistair Darling wrote in a column in the Wall Street Journal.

The search for collective solution to the worst economic and financial crisis since the 1930s, however, seems to be getting mired in the rift among nations over increased spending and better regulation.

Finance ministers from the group of leading industrialised countries and emerging economies such as China, India, Brazil and Russia will meet in London on 2 April to discuss tougher market regulation and the need for economic stimulus.

The G20, which comprises the Group of Seven industrial nations - all of which are in or near recession - and key emerging markets, represents more than 80 per cent of the global economy.

The G-20 meeting comes amidst reports that the world economy shrank for the first time since 1945 in the last quarter of 2008, throwing millions of people out of work. The International Monetary Fund (IMF) forecasts global economic growth to be negative in 2009, the first in over 60 years.