Hopes for an agreement to address the huge trade surpluses being run up by China, Japan, Germany and other successful exporters – the most important of the so-called global imbalances – were dashed even before the first G20 summit under French chairmanship got under way in Paris.
The Governor of the People's Bank of China declared: "External pressure has never been an important factor of consideration and we have never paid special attention to it." Zhou Xiaochuan's words were an open snub to efforts, led by the French Finance minister, Christine Lagarde, to reach a consensus even on the "indicators" by which these imbalances would be measured – let alone to secure concrete action by Beijing to revalue the Chinese yuan and switch growth away from exports to the West.
Mr Zhou's blunt language suggests both a more assertive Chinese attitude, and that the talks might even go backwards from the commitment made at the November G20 Leaders' Summit in Seoul to move to more "market-oriented" exchange rates – code for an appreciation of the yuan. Since then, the US Federal Reserve's $600bn of quantitative easing has begun, directly injecting money into the American economy, with the indirect aim of pushing the dollar down. The Fed's policy represents the first shot in a potentially disastrous "currency war" between the US and China. Peace seems unlikely to break out between the "G2" in Paris.
Ahead of the talks, the Governor of the Bank of England, Mervyn King, who is attending alongside the Chancellor, George Osborne, issued a stark warning: "All the main players around the world are rationally pursuing their own self-interest. But the financial crisis has revealed that what makes sense for each player individually does not always make sense in aggregate.
"Many policies, in addition to changes in exchange rates, will be needed to reduce imbalances. If agreement is not reached, at best there will be a weak world recovery; at worst, the seeds of the next financial crisis will be sown."
There had been some optimism that having a major economic power such as France driving the G20's discussions would lead to more action than under last year's South Korean leadership. Yet even Mrs Lagarde stressed the modesty of their goals and the two-year timescale envisaged for action: "Once we have these indicators, and that's highly debated at the moment and will be in the next couple of days... then we will move on to agree on guidelines".
The proposed indicators comprise: exchange rates; currency reserves; public debt and deficits; private savings; and, crucially, trade balances. Yoshihiko Noda, for Japan, said: "It is uncertain whether the countries will agree on all indicators, but I think agreement on some is possible." Yet a German source made clear that Wolfgang Schäuble, the Finance minister, would want five or nothing. Caps on current-account trade balances were proposed by the US Treasury Secretary, Timothy Geithner, last year and rejected by China.
There is also scepticism that President Sarkozy, hosting the talks, will persuade others to reach an accord on limiting commodity prices and imposing tougher rules on the big banks.