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Prime Minister Stephen Harper is warning his G20 counterparts not to let the shaky global economy scare them away from tackling large deficits and dangerous trade imbalances.

In a letter to the G20 leaders before their summit in Korea next week, Mr. Harper says they can't afford to back away from promises to slash deficits and debt.

Plus, he says they need to go even further and resist a full-blown currency war by agreeing to guidelines to their current accounts -that's the amount of money a country as a whole owes, or is owed, by the entire world.

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"In Seoul, we will need to take bold and concerted action, building on progress achieved in Toronto and previous summits," Mr. Harper writes, in excerpts of the letter released by officials.

"As a first step, we must acknowledge the role played by the persistence of large and unsustainable current account imbalances, in deficit and surplus countries," he writes.

The global recovery is shaky and uneven, causing exchange rates to surge up and down, he notes. And the lopsided nature of global trade and investment that was partly the cause of the recession in the first place is getting worse again, he says.

"In Seoul, we should have a frank discussion on how to narrow these imbalances."

In particular, he writes, China needs to allow its currency to appreciate more quickly. That way, China would import more and export less, helping China deal with its massive surpluses and the United States with its massive debts.

G20 finance ministers agreed last month that the best way to prevent a destructive currency war would be to set guidelines for how big current account surpluses or deficits should be.

But they left the details on how best to do that up to the leaders, who are meeting for two days at the end of next week.

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In the meantime, emerging markets have been complaining that the United States is exacerbating currency instability by engaging in a second major round of quantitative easing - a bond-buying program run by the U.S. Federal Reserve that injects more cash into financial institutions and amounts to printing money.

"The reason for the tension is that the stakes are high," Mr. Harper's spokesman Dimitri Soudas told reporters.

The global recession continues to hurt the world economy, he said, and countries are on edge as they try to figure out the best way to get things back on track again without running up massive surpluses or deficits.

Unless the G20 takes concrete steps at the summit, the global economy risks a major setback, Mr. Soudas added.

"Without continued co-ordination to address vulnerabilities in the world economy, there is a significant risk that countries will increasingly undertake unilateral and trade-distorting measures."

The stakes may be high heading into the summit, but so is optimism.

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Since Canada hosted the G20 summit in June, negotiators have been able to agree to a package of tough reforms for banking and financial rules and regulations.

They've also been able to figure out how to reform the International Monetary Fund so that it better reflects the new global balance of power, giving a larger voice to China and other emerging markets, and a smaller voice to Europe.

Leaders at the summit will formalize the deals, officials said.

And with finance ministers agreeing to focus on current accounts instead of directly on the touchy subject of exchange rates, analysts say China has more room to negotiate, and can avoid a destructive showdown with the West.

China's leaders have recently set out domestic plans that would result in lowering the current account surplus, says Wendy Dobson at the University of Toronto's Rotman School of Management.

"It really sits well with the Chinese. For their own politics, they're doing exactly what they need to do for the G20," Dr. Dobson said in an interview.

"I am quite optimistic about the Seoul meeting."

Mr. Harper departs Tuesday for the two-day G20 summit, where he'll rub elbows with the most powerful leaders in the world.

He'll then travel to Japan where he will attend the Asia-Pacific Economic Co-operation summit. There, leaders will talk further about trade balances and currency, but also talk about food security and free trade.

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