LEADERS OF the G20 wealthy industrialised nations gather in Seoul this week for what is set to be a tough round of negotiating.

The gathering takes place amid tensions concerning the future of the global economy and conflict over currency issues.

As the world economy recovers slowly, the G20 meeting – which brings together leaders from the United States, Germany and Japan as well as those from emerging economies like Brazil, India and China – is charged with coming up with measures to avoid another global financial crisis.

With most countries barely a year out of recession, G20 leaders reconvene in the Korean capital on November 11th and 12th. They will attempt to resolve differences over how best to reduce the imbalances destabilising the world economy, as calls for protectionism and trade barriers grow.

The G20 group of nations account for 85 per cent of the global economy and this is its fifth meeting since leaders gathered in late 2008 to map out a response to the meltdown at that time.

One of the priorities will be to set measurable targets for reducing trade and current account gaps. The biggest concern is the huge imbalance between the US, which buys far more than it sells to the rest of the world, and developing countries, such as China, which are running big trade surpluses.

The nations will also study proposed fiscal reforms, such as more rigorous standards and supervision for large banks and other institutions.

Washington believes China’s undervalued currency, the yuan, contributes to global imbalances because it gives Beijing a trade boost by making Chinese goods cheaper in the US and elsewhere. However, it is unlikely to take a direct approach to this issue in Seoul.

Political issues could also affect the talks. Tension between North and South Korea remains high over the sinking of South Korean warship the Cheonanearlier this year that has been blamed on North Korea.

Meanwhile, Japan is embroiled in a row with China over disputed islands in the South China Sea.

We can expect US president Barrack Obama, Chinese president Hu Jintao, Japanese prime minister Naoto Kan and others to keep a lid on obvious signs of conflicting interests at the summit.

China is entering the talks in confident mood. “We hope the G20 can play a big role in promoting global monetary reforms and governance, and help the global economy to have strong, sustainable and balanced growth,” commerce minister Chen Deming said during a state visit by President Hu Jintao to Portugal.