China backs G20 coordination

China offered some support on Wednesday to U.S. plans to build a more balanced global economy, as world leaders seek to agree ways to nurture a tentative recovery and prevent future crises.

The European Union unveiled its blueprint for an overhaul of the way banks and financial markets are policed, with plans for a banking super-watchdog and a pan-European supervisor that it hopes can be replicated on the global stage.

Leaders of the Group of 20 leading rich and developing countries meet in the United States on Thursday and Friday, their third gathering since the collapse of investment bank Lehman Brothers a year ago, with the focus shifting from fighting the worst recession since the 1930s to preventing it from happening again.

U.S. President Barack Obama, reflecting the pressure he faces for results on a slew of foreign policy problems, issued a blunt message to world leaders at his United Nations debut that other countries must shoulder a larger burden in tackling international crises.

Those who used to chastise America for acting alone in the world cannot now stand by and wait for America to solve the world's problems alone, Obama said. Now is the time for all of us to take our share of responsibility.

Central to the Pittsburgh talks will be a U.S. plan to correct the world's economic imbalances by shrinking surpluses in big exporting countries like China and boosting savings in debt-laden nations including the United States.

Germany signaled some coolness to the idea, with a government spokesman saying Berlin wants the G20 countries to focus on financial market regulation this week.

The issue of financial market regulation is central for us, German government spokesman Ulrich Wilhelm told a regular government news conference in Berlin.

FRENCH EURO CONCERNS

France is concerned about the level of the euro against other currencies and hopes the Pittsburgh G20 will set a timeframe for a future discussion on exchange rates, a French government official said on Wednesday.

Obama wants a framework of mutual assessment where the International Monetary Fund (IMF) would make policy recommendations on rebalancing to the G20 every six months, according to a paper obtained by Reuters.

We approve of countries strengthening their macro-economic policy coordination and together pushing forward the sustainable and balanced development of the world economy, China's foreign ministry said.

It appeared to be much less sure about concrete coordinated policy action, saying advice from international financial bodies should be for reference only and that countries should decide on economic policies according to their own national conditions.

China's central bank governor Zhou Xiaochuan also said it was wrong to say China's high savings rate and trade surpluses were a cause of the financial crisis.

Analysts believe Obama's plan will meet resistance from China if it poses any risk to its economic growth.

The European Union said its proposed banking super-watchdog would have the power to overrule individual countries, such as Britain, which is fighting to keep control over the centerpiece of its economy, the City of London financial center.

Our aim is to protect European taxpayers from a repeat of the dark days of autumn 2008, when governments had to pour billions of euros into the banks, European Commission President Jose Manuel Barroso said in a statement.

The European system can also inspire a global one and we will argue for that in Pittsburgh.

The rules, aimed at reforming an industry blamed by many for triggering the economic slump, need the approval of the 27 EU national governments and the European Parliament to take effect.

GERMANY ACCUSES LONDON

German Finance Minister Peer Steinbrueck accused London of doing its best to block stricter rules.

There is clearly a lobby in London that wants to defend its competitive advantage tooth and nail, Steinbrueck said.

Also up for discussion in Pittsburgh will be reforms to the IMF, trade policy and global warming.

India's prime minister called for a strong warning against protectionism as he set out for the gathering.

Earlier this month, the United States slapped tariffs on Chinese-made tires, reviving fears of a tit-for-tat round of protectionist measures that risk strangling trade and plunging the global economy back into recession.

We would also like to see a strong message to emerge from Pittsburgh against protectionism in all its forms, whether trade in goods, services, investment or financial flows, Manmohan Singh said, adding the global economy was not out of the woods.

Developing nations are becoming increasingly vocal in calling for a greater role at international bodies like the IMF, and both China and Brazil repeated their support for this cause on Wednesday.

While the G20 meeting may signal another step in a long-term global power shift, investors will look for hints as to how the United States and Europe plan to wind down massive emergency stimulus programs without destabilizing economies again.

British Prime Minister Gordon Brown said fiscal stimulus measures would remain in place until we are sure that the economy has recovered.

The G20 will also discuss climate change, where rifts remain between rich and developing nations over how quickly to cut carbon dioxide emissions and who should pay.

A top White House adviser said on Wednesday the United States was still working on a possible deal with G20 partners to phase out subsidies for fossil fuels.

(Additional reporting from Reuters bureaus worldwide; Writing by Mark Potter and Steve Holland; Editing by Howard Goller)