Business Express is an online portal that covers the latest developments in the world of business and finance. From startups and entrepreneurship to mergers and acquisitions, Business Express provides reporting on the stories that matter most to business leaders and decision-makers.The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.

G7 finance heads face tricky trade-off in debating steps to counter China

G7 finance heads face tricky trade-off in debating steps to counter China

By Andrea Shalal and Christian Kraemer

NIIGATA, Japan (Reuters) -Finance leaders of the Group of Seven (G7) advanced economies will debate this week the idea of implementing targeted controls on investments to China, which analysts see as a double-edged sword that could make little headway.

China is much on the minds of G7 finance leaders gathering in the Japanese city of Niigata, with current chair Japan leading fresh efforts to diversify supply chains and reduce their heavy reliance on Beijing.

But the group is not on the same page in terms of how far it should go in countering China, as hurting trade with the world’s second-largest economy could deal a heavy blow to export-reliant countries such as Germany and Japan.

The G7 nations can little afford further risks to their fragile economies, with Washington struggling to resolve a debt ceiling stand-off that could tip the U.S. economy into recession.

A scheduled meeting on Friday between U.S. President Joe Biden and top lawmakers was postponed until early next week as the two sides seek a compromise to avoid a catastrophic default.

German Finance Minister Christian Lindner said on Friday he hoped U.S. politicians would come to a “grown-up” decision on talks to raise the $31.4 trillion debt ceiling – the maximum amount the U.S. government is authorised to borrow – warning there was a risk to the global economy if they did not.


The United States is at the forefront in pushing for stronger steps against China. Treasury Secretary Janet Yellen said on Thursday many members of the G7 economies shared U.S. concerns about China’s use of “economic coercion” against other countries, and were considering ways to counter such behaviour.

Germany is increasingly wary of Chinaa as a strategic rival and has considered steps to reassess bilateral ties, but is cautious of being seen as forging a G7 front against China.

Preliminary data provided to Reuters showed Germany’s direct investment in China continues to rise even as its government wants to “derisk” their relationship with Beijing.

While the G7 leaders’ summit next week could see debate on implementing targeted controls on investments to China, any screening of investments would be targeted to strategically important areas, a German government source said on Thursday.

Don't miss out on any breaking news or insightful opinions!
Subscribe to our free newsletter and stay updated on the go!

By submitting this form, you are consenting to receive marketing emails from: Global Banking & Finance Review. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email.

The discussions among the finance leaders will lay the groundwork for the summit in Hiroshima.

Host Japan is cautious about the idea of outbound investment controls against China given the huge impact it could have on global trade and its own economy.

“Restricting outbound investment would be quite difficult,” said one of the officials, who spoke on condition of anonymity due to the sensitivity of the matter.

British Finance Minister Jeremy Hunt told the Nikkei newspaper on Thursday the G7 must counter China’s economic coercion, though made no mention of investment controls.


Another initiative to be endorsed by the G7 is to create partnerships with low and middle-income nations to diversify supply chains away from countries like China.

Japan has invited six non-G7 countries, including Brazil, India and Indonesia, for an outreach meeting on Friday where supply chain partnerships will be discussed.

Analysts, however, are sceptical on how effective such steps to counter China would be.

“It’s very difficult to leave China out given its economic might,” said Toru Nishihama, chief emerging market economist at Dai-ichi Life Research Institute. “Doing so could divide world trade, damage global growth and hurt G7 economies themselves.”

The G7 finance leaders are expected to issue a joint statement after their three-day meeting ends on Saturday.

(Reporting by Leika Kihara, Andrea Shalal and Christian Kraemer, Additional reporting by Tetsushi Kajimoto and Takaya Yamaguchi in Niigata, Yoshifumi Takemoto in Tokyo; Editing by Kim Coghill and Alex Richardson)


Recent Post: