Tensions between the United States and some of its major trading partners sharpened Tuesday on the eve of a summit of the world's biggest economies, raising fear that the meeting may collapse in rancor and set back a global economic recovery.
Washington's plan to pump $600 billion into the U.S. economy by buying Treasury bonds in an attempt to stimulate recovery has met with sharp criticism before the Group of 20 summit this week in Seoul, which President Obama and other world leaders are expected to attend.
The loudest rebukes of the new U.S. monetary strategy have sounded here in Germany, Europe's economic powerhouse, where an export boom is fueling the fastest growth in nearly 20 years. Berlin accuses Washington of recklessly piling up debt and deliberately trying to devalue the dollar to undercut German competitiveness.
In a scathing interview published this week, German Finance Minister Wolfgang Schaeuble poured scorn on the U.S. Federal Reserve's plan to boost the economy by increasing the money supply. He also dismissed complaints from the Obama administration that export-reliant economies such as Germany and China had done little to stimulate demand in their own countries, being content instead to rack up huge trade surpluses with the U.S.
"The American growth model … is in a deep crisis. The United States lived on borrowed money for too long," Schaeuble told Der Spiegel magazine. "There are many reasons for America's problems, but they don't include German export surpluses."
He accused the U.S. of hypocrisy in criticizing China's policy of keeping its currency, the yuan, artificially low while at the same time trying to achieve the same effect for the dollar by pumping more money into the economy.
On Tuesday, German Chancellor Angela Merkel kept up the pressure, warning that "a policy that aims for an artificially devalued currency … is shortsighted and in the end hurts everybody."
Merkel told Die Welt newspaper that Germany's large trade surpluses demonstrated the superiority of its products in the global marketplace, a success that should be emulated by weaker-performing countries, not penalized. Washington has recently floated the idea of automatically reexamining trade policies with countries whose trade imbalance with the U.S. exceeds a certain level.
Merkel's comments come as Europe continues to struggle with its own economic troubles, which could help explain the sharpened rhetoric toward Washington.
Germany may be growing at a fast clip, but fellow euro zone countries are foundering, especially Ireland and Portugal, where ongoing debt crises have revived worry of a national default. That fear was calmed this year when Germany led the establishment of a $1-trillion rescue fund for its flagging neighbors, but in recent days, skittish international investors have driven up borrowing costs for the Irish and Portuguese governments to dangerously high levels again.
China, too, has spoken out against Washington's new "quantitative easing" program as a potentially destabilizing influence.
Ma Delun, a deputy governor of the People's Bank of China, told reporters in Beijing that the Fed's infusion of cash could trigger a rush of capital to developing countries and create unsustainable bubbles in asset prices.