Analysts View: What vote means for G20 summit

(BestGrowthStock) – Voter anxiety about the economy and discontent with President Barack Obama’s leadership fueled big Republican gains in mid-term elections on Tuesday.

That raises questions of what the outcome means for next week’s G20 summit in Seoul that will tackle global economic imbalances and currency tensions.

Following are a selection of experts’ views:

TONY TWINE, SENIOR ECONOMIST AT RESEARCH GROUP ECONOMETRIX

“I think that a disturbance to earlier power balances in United States is no good news to anybody who was hoping that the U.S. would not try to protect itself.

“The shift in the balance of power is likely to cause a more protectionist approach to foreign economic policy. That may mean traditional trade barriers.

“For America to make those higher might prove to be difficult because they are not the easiest nation to trade with at present.

“They might start looking for other mechanisms, including currency devaluation or the prevention of other currencies from devaluing against the dollar. The first is easier to achieve than the second.

“The executive arm of the American government taking part in G20 talks may well have to slightly modify its position, which could continue to change depending how the Democrats read ongoing events in the run-up to the 2012 presidential, congress and senate elections.

“I think it dilute the ability of the G20 (to implement tough financial regulatory reforms) because if the largest economy of the world wants to play by a particular set of rules the 19 of the 20 states want to play by a different set of rules, guess who’s going to win?”

KAREL LANNOO, Center FOR EUROPEAN POLICY STUDIES

“We look much more to the United States in regulation than they look to Europe. The type of Republicans that have taken Congress will strengthen the kind of ‘do it ourselves’ attitude in America but it’s very unclear for now what the impact will be on global regulation.”

TAO XIE, EXPERT ON U.S. POLITICS AT BEIJING FOREIGN STUDIES UNIVERSITY, WHO ADVISES THE CHINESE GOVERNMENT

“On the yuan front, the Republicans will probably lower the heat. They are aware that demands for appreciation have to be balanced against calls for greater market access in China.”

ANTON GUNAWAN, ECONOMIST AND ANALYST AT BANK DANAMON, JAKARTA

“Domestic policy may be difficult for him (Obama) to implement from now, including all the policy switches related to the G20 topics like the currency war, the pressure on China, protectionism and so on. Obama will try to continue pressuring in the G20 forum for a solution to the currency imbalances, especially because according to the U.S., the currency inflexibility is the main source of the problem.”

SUN ZHE, PROFESSOR OF INTERNATIONAL RELATIONS AT TSINGHUA UNIVERSITY IN BEIJING

“Many of the election races featured China, and that’s because so many people are worried about the economy. That’s not going to change much, and so I believe that China will continue to be treated as the bad guy in many issues.”

On the yuan exchange rate issue, he said:

“I don’t think the new Congress will be all that different … But the Republicans will lean more toward a multilateral approach, drawing in Latin America, other Asian countries and so on to apply collective pressure on China.

WIMAR WITOELAR, VETERAN INDONESIAN POLITICAL ANALYST

“Yes, Obama is weakened at home, and is weakened in the world now. The U.S.’s desire to assert its position in financial markets is now compromised. People will not be listening to Obama’s position, instead working behind his back and looking to what the Republicans are doing. He is no longer a strong partner to have.”

KWON SOON-WOO, HEAD OF MACRO-ECONOMICS, SAMSUNG ECONOMIC RESEARCH INSTITUTE IN SEOUL

“The Obama administration may lose the momentum in pushing ahead with the proposed reform in the U.S. financial industry and this may give emerging-market economies within the G20 an excuse to become less cooperative in accepting aggressive reform measures. On the foreign exchange issue, both the Republicans and Democrats have recently showed little difference in their approach and so I wouldn’t expect much difference in the way the U.S. deals with the issue.”

LIN CHONG-PIN, PROFESSOR OF STRATEGIC STUDIES, TAMKANG UNIVERSITY, TAIPEI

“Washington’s Asia policy, which includes China, has been turning. The Obama administration has learned it needs to be more flexible. The Republicans are supported by businesses, and they usually cave first to China, so in the long run I don’t see much difference, just some words and gestures in the short term.”

Analysts View: What vote means for G20 summit