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G7 talks focus on ways to strengthen banks and supply chains

NIIGATA, Japan – Mounting, cybersecurity and supply chain reliability were among the topics of financial talks held behind closed doors in Japan by the Group of Seven developed countries on Friday.

Tensions with China, and tensions with Russia over its war with Ukraine, have significantly overshadowed the wide range of issues the G7 will be addressing this year in Asia’s sole member, Japan.

But as G7 finance ministers and central bank chiefs debate how to protect the international rules-based order and prevent what it calls “economic coercion” by China, Beijing accuses the rich nations club of hypocrisy. and reacted violently.

China’s foreign ministry spokesman Wang Wenbin said on Friday that China is a victim of economic repression.

“If any country should be criticized for economic coercion, it should be the United States. They are taking unfair measures,” Wang said at a regular press conference.

China accuses the United States of hindering its rise as an increasingly wealthy modern nation through trade and investment restrictions it says are necessary to safeguard America’s economic security.

U.S. Treasury Secretary Janet Yellen and Federal Reserve Board Jerome Powell heading for a photoshoot of G7 Finance Ministers and Central Bank Governors with their invited non-G7 counterparts in Niigata, Japan May 12, 2023 Chairman.

U.S. Treasury Secretary Janet Yellen said the measures were “narrowly targeted” and focused on national security before the talks began.

“The focus is not on undermining China’s economic competitiveness or impeding China’s economic development,” Yellen said.

Asked what it meant for G7 countries to try to block “economic coercion” by China, Yellen cited China’s trade with Australia as an example.

“There are also examples of China’s use of economic repression against countries whose behavior is not favorable to China from a geopolitical point of view,” he said. “We at the G7 share common concerns about this type of activity and are considering what we can do to combat this type of behavior.”

Relations between China and the 27-member European Union (EU), which is a member of the G7, have also been strained by frictions over trade and tacit support for Russia.

The leaders at the meeting in Niigata said they would consider ways to prevent countries from circumventing sanctions against Russia designed to impede their ability to continue the war.

Both the United States and the European Union have insisted they are not advocating “decoupling” with China or dismantling their broader economic ties, but they are seeking to “decouple” the relationship to avoid over-reliance on China. Supports risk aversion.

As the G7 presidency, Japan has made it a priority to launch partnerships with low- and middle-income countries to build “robust supply chains” that help reduce carbon emissions. One of the key areas of concern for all G7 countries is China’s concentration of suppliers of the rare earth materials needed for many high-tech products.

Meanwhile, steering the global economy toward a sustained recovery from the pandemic while keeping inflation in check, which has soared to the highest level in decades in a year due to the recent failures of US and European banks. It’s getting more complicated.

Japan’s Finance Minister Shunichi Suzuki said Thursday that “financial instability spreads quickly through social networking sites, and it has become clear that online banking, which allows people to withdraw money after hours, could lead to bank runs.” Stated.

The failures of Silicon Valley Bank and other financial institutions were largely due to the pressure of higher interest rates aimed at slowing business activity and cooling inflation by making borrowing more expensive.

The meeting in Niigata “is a good opportunity to compare notes and think about how we can make the world a little more stable and reach the price stability we want to reach in the short term,” said Chair Christine Lagarde. The European Central Bank said in videotaped comments posted online.

At the top of the debate among financial experts is whether President Joe Biden and Congress will agree to raise the debt ceiling before the government runs out of money to pay its bills. is. Yellen said a bond default would be catastrophic and “unthinkable.”

A meeting between Mr. Biden and lawmakers on the issue has been postponed to May 18 as staff talks continue over the weekend. Administration officials describe it as a positive step and do not appear to signal a breakdown in talks.

The three-day meeting in Niigata, a port city on the Sea of ​​Japan, will be the last in a series of ministerial meetings in preparation for the G7 summit in Hiroshima next week.

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