Obama urges G-20 leaders to continue government support of economic recovery

President Obama made apparent Friday that he disapproved of Europe’s pullback in spending and China’s refusal to let its currency rise in value — two contentious issues that threaten to create discord and disunity during the Group of 20 summit next weekend in Toronto.

In a public letter to leaders of the G-20 nations, Obama expressed concern about uneven growth in the global economy, and he warned about a premature withdrawal of government support to aid economic recovery.

The president did not specifically mention Europe, but it was clear from his comments that Obama did not see eye to eye with Germany and other European countries that recently have pushed through fiscal austerity measures in response to the debt crisis in Europe.

“We worked exceptionally hard to restore growth; we cannot let it falter or lose strength now,” Obama said in the letter, released Friday by the White House. “This means that we should reaffirm our unity of purpose to provide the policy support necessary to keep economic growth strong.”

During the global recession last year, leaders of the G-20, which includes the U.S., major European nations, China and India, took unprecedented coordinated action to fight the severe economic downturn with public funds and monetary policy to stimulate growth.

And the global economy, after contracting last year for the first time in decades, is projected to grow in excess of 4% this year, led by the strength of China and other emerging countries.

But alarmed by the sovereign debt woes in Greece and some other countries, European leaders have turned their focus on getting their fiscal budgets in order, passing tough spending and other social policies that analysts say will crimp public and private consumption in Europe and slow global economic growth.

Many economists, including Federal Reserve Chairman Ben S. Bernanke, have warned about the dangers of the large budget deficits in the U.S. as well, and lawmakers in both parties, reflecting the public’s concern about deficit spending, have been reluctant to back Obama’s calls for additional fiscal economic stimulus.

In his letter, Obama acknowledged the importance of restoring a more balanced and sustainable budget but suggested that now was not the time to be belt-tightening.

“We must be flexible in adjusting the pace of consolidation and learn from the consequential mistakes of the past when stimulus was too quickly withdrawn and resulted in renewed economic hardships and recession,” he said in an apparent reference to the Great Depression.

And it’s not clear as it was last year that Obama will get support from European leaders at the G-20 meeting on another important goal: to push China to let its government-controlled currency rise in value.

Many U.S. officials and economists have complained that the Chinese yuan is grossly undervalued relative to the dollar, thereby giving China’s exporters an unfair advantage in selling their goods in U.S. and other foreign markets.

Beijing has kept the yuan tightly pegged to the dollar since mid-2008. But with the outbreak of the European debt problems, the euro has fallen sharply in value against the dollar and hence also the yuan — making it less likely that European leaders will come down as hard on the Chinese on the currency issue.

Chinese officials in recent days have suggested that they were not preparing to make any immediate move on the currency.

don.lee@latimes.com