U.S. goal: A Chinese currency change

WASHINGTON (CNNMoney.com) -- The Obama administration has a big goal going into this weekend's Group of 20 finance ministers' meeting in South Korea: Press China and other nations to allow currencies appreciate.

But don't expect much, experts say. Individual nations just aren't ready to give up currency manipulation as an economic tool, especially when so many are still struggling to emerge from the worst of the recession.

"Everybody knows (currency manipulation) is not good for the world economy, but everyone is looking after their short-term interests," said Eswar Prasad, a professor of trade policy at Cornell University who used to run the China division at the International Monetary Fund.

Treasury Secretary Timothy Geithner is attending the G-20 finance minister summit in Gyeongju, South Korea, which started Friday and serves as the precursor to the heads of state -- including President Obama -- meeting in Seoul on Nov. 11.

Geithner pushed for more market-oriented exchange rates to help reduce trade imbalances in a letter to the G-20 finance ministers, dated Oct. 20 and obtained by CNNMoney.com.

"G-20 countries should commit to refrain from exchange rate policies designed to achieve competitive advantage by either weakening their currency or preventing appreciation of an undervalued currency," Geithner wrote. "G-20 countries will work together to ensure against excessive volatility and disorderly movements in exchange rates."

Geithner's goal matches his recent stepped-up rhetoric in the United States, pressing China to quit fiddling with its exchange rate policy.

Critics say China has kept the yuan too low. Although it has appreciated a little -- 1% this month -- it hasn't grown in proportion to China's economic growth, according to economists.

While China is seen as the biggest nation to keep its currency low, it's not alone. To a lesser degree, countries such as Brazil, Thailand, South Korea and Japan have taken steps to slow their currencies' appreciation.

Nations whose currencies are lower than others enjoy a trade boost in exports. Their own domestic manufacturers also benefit, because competing imported goods are pricier.

"The export sector is a good way to drive jobs; but the problem is everybody can't export at the same level at the same time," Prasad said.

Lately, the United States has benefited from comparatively stronger exports due to a weaker dollar. But the U.S. view -- expressed Monday in a speech by Geithner -- is that the dollar has weakened due to depreciation, not devaluation.

The Chinese have a different view. They say U.S. monetary policy results in devaluation because the Federal Reserve keeps interest rates low and buys Treasuries, injecting new money into the financial system. Fed chief Ben Bernanke has signaled that the policy will expand at the central bank's next policy meeting in early November.

In the meantime, other nations' currencies have appreciated compared to the dollar, and in response those countries have been exerting downward pressure to slow their own appreciation and stoke their own economies.

"There's a feeling that different countries are taking different approaches to the same end," Prasad said. "That's not going to work for the world collectively. If we do this, we'll end up on the road to collective ruin."

If Geithner had his way, he'd get the G-20 nations to agree on a set of "norms" on currency rate policy, he told the Wall Street Journal on Thursday.

But G-20 officials aren't likely to go that far, at least not at this point, said Ted Truman, senior fellow at the Peterson Institute for International Economics. He expects a general agreement to work together, that employs vague terminology as opposed to hard targets on currencies.

"Some statement about cooperation on exchange rate management is in the collective interest of the group," said Truman, a former assistant Treasury secretary for international affairs.