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World Leaders Agree to Cuts by 2013 for Richest Nations

Focus on Asia

G8 leaders L to R: Jose Manuel Barroso, President of the European Commission, Naoto Kan, Prime Minister of Japan, Silvio Berlusconi, Prime Minister of Italy, Barack Obama, President of the US, and Nicolas Sarkozy, President of France, in Huntsville, Ontario on June 25, 2010. (Don Emmert/AFP/Getty Images)

G8 leaders L to R: Jose Manuel Barroso, President of the European Commission, Naoto Kan, Prime Minister of Japan, Silvio Berlusconi, Prime Minister of Italy, Barack Obama, President of the US, and Nicolas Sarkozy, President of France, in Huntsville, Ontario on June 25, 2010. (Don Emmert/AFP/Getty Images)

Focus on Asia

NEW YORK, June 28, 2010 - World leaders of the major industrialized and developing nations have left the G-20 summit with a pledge for the world's richest nations to cut their deficits in half within three years.

"Although the nature of the crisis has changed, it is far from over" said Asia Society Associate Fellow Simon Tay. "It is instead evolving with Euro-zone uncertainties and a soft US recovery."

The plan comes at a time when nations are trying to curb ballooning debt and large budgets to ensure the overall global recovery. 

Tay said going forward it will be essential to involve Asia, not just China, and try to minimize friction with the US; "Otherwise, post-crisis efforts will have to deal with economic and political uncertainties at the same time."

During the summit, US President Barack Obama met with a number of top Asian leaders including South Korean President Lee Myung Bak, Chinese President Hu Jintao, Indonesian President Susilo Bambang Yudhoyono, Indian Prime Minister Manmohan Singh and new Japanese Prime Minister Naoto Kan.

The White House said the meetings signal America's increased engagement with the Asia Pacific region.

At the top of the agenda was China's recent decision to revalue the yuan, the war in Afghanistan, South Korea's relationship with the North, and India's economic growth.

Asia Society Executive Vice President Jamie Metzl said China's decision to revalue its currency is "a positive step but doesn't yet fix the global problem of a highly undervalued yuan."

Asia Society Director of Global Policy Initiatives Mike Kulma said the move signals China is confident its economy is growing at a steady pace and "believes its exports are in good shape."

Countries like the US had seen the yuan as undervalued and looked to China to revalue its currency for quite some time. Kulma explained this was not the first year the Chinese have allowed their currency to rise. The yuan was allowed to move 20 percent from 2005 to 2008 but Kulma doesn't expect that amount of change, necessarily.

"I think it's going to be a gradual progression for the revaluation," said Kulma. "It won't allow for a major revaluation of the currency to happen very quickly. And again, this ties back in to issues of growth of its own economy. They want to track these things very closely to make sure that it is not having a negative effect on their own growth."

Reported by Jennifer Mattson, Managing Editor, Asia Society Online.