The Clinton administration appealed Saturday to Japan and its other major economic allies to do more to boost growth in their countries and relieve pressure from a soaring U.S. trade deficit.
The widening imbalances in global trade, a weakening dollar and a falling U.S. stock market were key concerns at a meeting of the world's seven largest industrial countries. Their talks came in advance of the annual joint meetings of the 182-nation International Monetary Fund and the World Bank.
Treasury Secretary Lawrence Summers and Alan Greenspan, chairman of the Federal Reserve, were the hosts for their counterparts from Japan, Germany, France, Britain, Italy and Canada.
With the trade deficit soaring to an annual rate of $247 billion, 50 percent higher than last year's record, Greenspan and Summers both have expressed concerns about sustaining such a huge imbalance.
While noting Japan finally appears to be recovering from its worst recession in 50 years, Summers said Tokyo must continue to use all available tools to stimulate the economy.
"Crucial to a sustained and balanced United States expansion will be greater balance in global economic growth," Summers said.
Summers and Greenspan met privately with Japanese Finance Minister Kiichi Miyazawa and Masaru Hayami for an hour before the G-7 talks. Treasury spokeswoman Michelle Smith described the meeting as a "very good and full discussion" of economic issues facing the two countries.
In a statement released after their meeting, the G-7 said Japan had pledged to inject more money into its economy, which should help cap the yen's recent rise. But they gave no indication that they are willing to support Tokyo's recent efforts to rein in the yen by selling it on the open market.
"We shared Japan's concern about the potential impact of the yen's appreciation for the Japanese economy and the world economy," the statement said.
Japanese authorities had pledged to "implement stimulus measures until domestic demand-led growth is solidly in place and, in the context of their zero interest rate policy, to provide ample liquidity until deflationary concerns are dispelled," the G-7 added.
Their statement appeared to shatter any hopes Japanese officials may have had of securing the help of their G7 colleagues for putting a lid on the yen's strength, which they fear could undermine a frail recovery in the world's number two economy.
The dollar has fallen by 15 percent against the yen over the past 10 weeks. The decline has raised worries in the United States about higher inflation and a potential sharp correction in the stock market if foreign investors begin to cash out their sizable U.S. holdings over worries about the dollar's weakness.
The weak dollar and inflation concerns were chief reasons cited in last week's 524-point drop in the Dow Jones industrial average, the worst performance in a year.
But comments by Summers and U.S. officials in recent days indicated the administration has no interest in intervening in currency markets to buy dollars. The preference is to keep the pressure on Japan to boost its domestic growth rather than rely on exports to fuel its economy.
The G7 statement also said economic prospects for major industrial nations had improved. But it added that "we still face a number of challenges" to make the world economy a better and more stable place."
On Russia, the G-7 nations expressed "the critical need for intensified efforts to combat corruption in Russia and money laundering and the importance of adequate safeguards to ensure that funds provided by the international financial institutions are used for their intended purposes."