Bank runs, cyber security and building more reliable supply chains to ensure economic security were among items on the agenda of closed-door financial talks Friday in Japan by the Group of Seven advanced economies.
Tensions with China, and with Russia over its war on Ukraine, loomed large on the wide horizon of issues the G-7 is tackling this year in Japan, its only Asian member.
But while G-7 finance ministers and central bank chiefs discussed ways to protect the international rules-based order and prevent what they are calling “economic coercion” by China, Beijing lashed back, accusing the club of wealthy nations of hypocrisy.
China accuses Washington of hindering its rise as an increasingly affluent, modern nation through trade and investment restrictions that the United States says are needed to protect American economic security.
Speaking before the talks began, U.S. Treasury Secretary Janet Yellen said such measures are “narrowly targeted” and focused on national security.
“It’s not focused on undermining China’s economic competitiveness or preventing them to advance economically,” Yellen said.
Asked what G-7 countries mean by trying to prevent “economic coercion,” namely by China, Yellen cited trade actions by Beijing against Australia as one example.
China’s relations with the 27-nation European Union, which is also a member of the G-7, have also been frayed by friction over trade and over its tacit support for Russia.
Leaders attending the talks in Niigata said they would be considering ways to prevent countries from skirting sanctions against Moscow meant to hinder its ability to continue the war.
Both the U.S. and European Union maintain they are not advocating “decoupling,” or dismantling extensive economic ties with China, but support “de-risking” relations to avoid becoming too dependent on China.
For its G-7 presidency, Japan has prioritized launching a partnership with low- and middle-income countries to build “robust supply chains” to help cut carbon emissions. One key area of concern for all G-7 countries is the heavy concentration in China of suppliers of rare piles of earth materials needed in many high-tech products.
Meanwhile, recent failures of banks in the U.S. and Europe have added to the complexity of steering the world economy toward a sustained recovery from the pandemic while cooling inflation that surged to multi-decade highs in the past year.
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