SEOUL—President Barack Obama headed toward the close of the Group of 20 summit, weakened by an anemic economic recovery and an election drubbing that have left world leaders questioning U.S. authority.
In private meetings with Mr. Obama on Thursday, Chinese President Hu Jintao resisted his pressure on currency revaluation. Mr. Obama also failed to secure a free-trade agreement with South Korea by a deadline he set for Thursday, a blow to a president who has pledged to double U.S. exports over the next five years.
The International Monetary Fund will be asked to judge the progress toward this "rebalancing."
Undersecretary of the Treasury Lael Brainerd said currency policy dominated a meeting between Messrs. Obama and Hu after the U.S. president raised it. Mr. Hu told his U.S. counterpart that China will push forward on revamping the yuan exchange-rate mechanism—a longtime goal of U.S. policy—but that such a move requires "a sound external environment" and can proceed only gradually, according to state television and a government spokesman.
He also told Mr. Obama that China is paying attention to the U.S. Federal Reserve's decision to pump $600 billion into the U.S. economy over the next eight months, which critics say is driving down the value of the dollar. Mr. Hu urged the U.S. to consider the interests of emerging markets, according to Chinese state TV.
"The major reserve-currency issuers, while implementing their monetary policies, should not only take into account their national circumstances but should also bear in mind the possible impacts on the global economy," Zheng Xiaosong, director general of the Ministry of Finance's International Department, reiterated at a pressbriefing.
White House press secretary Robert Gibbs pushed back on the notion that Mr. Obama's authority has diminished. China was not responding to currency pressure when the U.S. president was far more popular, he noted, and critics of US economic policies, like the outgoing president of Brazil, remain helpful on other fronts, from Iran to climate change.
That China was emboldened to lecture the U.S. on its currency, a notable reversal of recent meetings, underscores how it and other countries, including Brazil and Germany, have emerged from the global economic crisis faster and more strongly than the U.S.
Domestic politics may also be at play. An aide to South Korean President Lee Myung-bak blamed the trade pact's failure in part on the U.S. elections, which he said distracted the White House at a key time. White House aides said Mr. Obama could not accept the deal on the table because it could not get through the new Congress.
Mr. Obama found himself in the odd position of having to defend the U.S.'s independent central bank. He was also unable to quell concerns that the U.S. government is deliberately trying to weaken the dollar to boost exports.
Brazi's President Luiz Inácio Lula da Silva said Thursday he would press Mr. Obama to explain the Fed's move. President Lee demurred when asked about it. "I think that kind of question should be asked to me when President Obama is not standing right next to me," Mr. Lee answered.
German Chancellor Angela Merkel and President Lee "stressed their common concern" over the U.S. Fed's move in their bilateral meeting, a German official said.
The U.S. says the policy is designed only to boost U.S. domestic growth, which is critical to the global economy. It also argues that the dollar's value is correlated to confidence in the U.S. and global recovery, , and some other countries have rushed to the Fed's defense.
"Those who are criticizing the policy of the Federal Reserve, I'm not sure what alternative they're suggesting," Canadian Prime Minister Stephen Harper told reporters in Seoul. "I'm not sure anyone else has provided any compelling argument as to what alternative policy they would pursue, at least in the short term."
The meeting of world leaders in Korea kicked off in earnest Thursday evening with a dinner and closed-door meetings focused in part on disputes over currency valuations and trade imbalances. The leaders are expected to reach several agreements before they adjourn Friday, namely on financial regulation and the role of the International Monetary Fund. But the issues that divide them have led officials to quash expectations of a breakthrough on the top issues of currencies and trade.
The senior U.S. official was blunt about Washington's ability to dictate hard policy: "You've got to live in the real world. This is the world of sovereign states. There is no country that is going to be willing to cede sovereignty over its economic policy to a committee."
Mr. Obama and Chancellor Merkel agreed to play down the sniping from officials that dominated the run-up to the summit. Both resolved to pick up the phone before going public with their frustrations.
"They both agreed that it's not ideal in the run-up of a meeting like the G-20 to be reading attacks on specific economic or financial policies in newspapers from Germany or the U.S.," a German official said. "There was an agreement that in the future, perhaps, there could be better consultation."
