ASHEVILLE: US officials urged Group of 20 country finance leaders on Monday to push harder for economic growth as the best way to counter concerns over rising global debt levels.
The two-day meeting in Asheville, North Carolina, comes as the global economy is being buffeted by an energy shock triggered by the Iran war, faces rising tensions over China’s huge goods trade surplus and is braced for how an investment surge in AI will ultimately play out.
Global debt levels earlier this year hit a record of nearly $353 trillion, leading to concerns about financial stability and prompting some investors to reappraise even traditionally safe havens such as US Treasuries. “The world is awash in debt post-GFC, post-Covid, and the only way for us to get out of this is to grow our way out of this,” US Treasury Secretary Scott Bessent said at the start of the meeting, referring to the 2007 to 2009 global financial crisis.
“I’m confident that a lot of the leaders are very receptive to this,” he added. US Federal Reserve Chairman Kevin Warsh, attending his first international economic policy meeting since taking office in May, said he was looking forward to learning more about growth prospects among member economies.
“If I were to try to characterise this moment, it would be one of a global investment surge,” he said, adding that it had reversed the “global savings glut”, which in the past had kept capital idle due to a shortage of investment opportunities.
Finance ministers and central bankers were due on Monday to attend a session with business leaders, reflecting the Trump administration’s view that growth was best served by freeing up the private sector by deregulation and producing more energy.
Bessent told that session that global growth had underperformed its potential for too long and that causes can no longer include “policy failures of our own making.
”He said that the US Treasury had identified several impediments to growth that G20 countries needed to work on, including “excessive regulatory and administrative burdens, poorly designed financial incentives and tax systems, insufficient public and private investment, internal market fragmentation, and gaps in workforce skills and mobility”.
Bessent also highlighted strong US growth, which has benefited from investments in AI infrastructure that have also helped to push up US Treasury debt yields by soaking up savings that had previously held US borrowing costs down by flowing into Treasuries. Ahead of the G20 talks, Bessent played down mounting market scrutiny of US debt levels, arguing the US was in a stronger position than many advanced economies because it continues to grow, even while running large budget deficits.
“First of all, I’m not sure where the bond market turmoil is,” he said in an interview. “What’s important, too, is that we are growing. ”A top US objective for the meeting is to persuade others - notably with the threat of imposing secondary sanctions - to isolate Iran and so end a months-long stand-off over the Strait of Hormuz that has disrupted global energy supplies.
Washington will also urge G20 members to re-examine their terms of trade with China to shrink global imbalances and press Beijing to rebalance its economy away from exports and toward domestic consumption.“ The world cannot have a China with a $1.2 trillion trade surplus,” Bessent said in an interview. “In China, the economy is quite weak, and they are trying to export their way out of it, and they need to rebalance their economy.” Bessent told CNBC he had had a “very robust meeting” on Sunday with China’s central bank governor Pan Gongsheng but declined to give further details. — Reuters
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