Finance leaders from the Group of Seven (G7) advanced nations highlighted the need to strengthen global supply chains by reducing dependency on China, according to German Finance Minister Christian Lindner on Friday.
Japan, which is hosting a three-day G7 conference in Niigata to discuss critical global issues, has been at the forefront of new efforts to diversify supply chains away from China through investment and aid collaborations.
Lindner told a press conference that countries like Germany sought to minimize their reliance on China. “Here, emerging and low-income countries come into play,” he explained.
While the G7-rich democracies are set to agree on a partnership agreement to strengthen supply chains, they are divided on how far they should go in confronting China, the world’s second-largest economy that is not a G7 member.
The United States is leading the charge for tougher measures. Treasury Secretary Janet Yellen has urged for targeted restrictions on Chinese investment to fight what she sees as Beijing’s “economic coercion” of other countries.
While concerned about China as a geopolitical foe, Germany is hesitant of being perceived as building a G7 front against Beijing, given the country’s substantial reliance on trade with it.
According to government insiders, Japan is likewise skeptical of the idea of investment limitations because of the significant impact such a move would have on global trade and its economy.
A Japanese finance ministry official who attended the G7 summit told reporters on Friday that the issue was discussed, but that Japan’s measures were not aimed at any one country.
Jeremy Hunt, the British Finance Minister, told the Nikkei newspaper on Thursday that the G7 must oppose China’s economic coercion, although he made no mention of investment limits.
After their three-day summit concludes on Saturday, the G7 finance leaders are likely to make a united statement.
