The US is trying to win the argument over trade imbalances and currency.
Talks between leaders of the G20 group of major economies are entering their second day in Seoul, with key nations locked in fractious talks.
Tensions are high between some delegations over how to correct distortions in currency and trade.
Some fear the conflict – primarily between the United States and China – may threaten global growth.
However, South Korea’s president said “big progress” had been achieved during overnight meetings of negotiators.
But Lee Myung-bak provided no further details.
The US has faced criticism from several countries for pumping another $600bn (£372bn) into its economy to try to revive growth through a second round of so-called quantitative easing.
And there are also divisions about China’s currency, the yuan, which Washington says is artificially weak and gives Chinese exporters an unfair advantage as well as leading to Beijing amassing huge foreign reserves.
What is the G20?
The G20 group comprises the world’s 19 leading national economies, plus the European Union.
It was formed in 1999, and held its first meeting that year.
Until 2008 the G20 was overshadowed by the smaller G8 grouping of France, Germany, Italy, Japan, the UK, the US, Canada and Russia.
However, this has changed since the global financial crisis of 2008, and the G20 has effectively now replaced the G8 as the main global economic forum.
The major growth in the economies of G20 members China, India and Brazil has also contributed to the rising importance of the grouping.
The G20 currently meets twice a year, but this is set to reduce to one meeting from 2011.
However Chinese officials argued that Beijing had an “unswerving” commitment to reform its currency regime, but that global economic stability was needed to achieve it.
“If you’re sick yourself, don’t ask others to take medicine,” commerce ministry spokesman Yu Jianhua said.
A spokesman for the summit said on Friday that G20 leaders were likely to reach some sort of agreement on resolving trade and currency disputes.
Earlier, in a joint news conference with the South Korean leader, US President Barack Obama insisted the G20 final communique would include mechanisms to promote balanced and sustainable international economic growth.
However BBC economics editor Stephanie Flanders said that the draft version of the communique still left much to be agreed on – especially on issues around exchange rates and imbalances.
In a seeming acknowledgement that the summit was not going to be as successful as previous meetings, British Prime Minister David Cameron said the G20 was “not in its heroic phase” – an apparent reference to its well-received response to the 2008 financial crisis.
The group needed to do “a lot more work” on fixing economic imbalances, Mr Cameron said.
“As they negotiate into the small hours, officials say the leaders might well end up broadly where they would have ended up a few weeks ago”
Read Stephanie’s blog
Some economists fear that if steps are not made to resolve the so-called “currency wars”, this could act as a barrier to trade which may risk a return to global recession.
President Obama has called on other nations to agree on clear rules for reducing big trade surpluses and deficits – and is urging agreement that a strong US recovery is in everyone’s interests.
“The most important thing that the United States can do for the world economy is to grow because we continue to be the world’s largest market and a huge engine for all other countries to grow,” he said.
He also called for a stronger promise from China that it will let its currency go up very soon, not simply at some point in the future.
That would make Chinese exports costlier abroad and make US imports cheaper for the Chinese to buy.
However our economics editor said that while the US may make headway at the G20, it had been weakened by the global criticism of its policies.
This means that China, and other nations with huge trade surpluses such as Germany, would “not be signing up to any hard numbers or targets”, she added.
Developing nations have also expressed concerns at the potential impact on them of the US Federal Reserve to pump more money into the economy, as well as having low interest rates.
There are fears that if US rates are kept too low, this could create bubbles in the prices of commodities and stocks.
G20 members
Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, Republic of Korea, Turkey, US, UK, European Union
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This would leave emerging markets could be vulnerable to a crash if investors later decide to pull out and move their money elsewhere, observers say.
“Memories of the recent financial crisis originating in the United States are still very fresh and make governments aware of the potential danger,” said BBC World Service’s economic editor Andrew walker.
He added that many developing countries had been through their own turmoil within the last 15 years – including the hosts South Korea which was caught up in the Asian crisis.
This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.
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