LONDON (Bloomberg) - Group of Seven nations aim to send a signal to China this month by announcing a joint effort against its economy, even as they struggle to agree on more than a broad statement of intent.
While member states want to better coordinate their responses to China’s economic practices, signing off on tangible measures is proving more complicated, according to people familiar with the discussions. Officials are still wrangling over how tough to be in their messaging to China, particularly on specific tools that could be deployed against it.
The United States is at the forefront in pushing for stronger steps against China. Treasury Secretary Janet Yellen said 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 behavior.
“We have been engaging in discussions with our G7 colleagues, and I would expect that that would continue these meetings, at least in some informal way,” Yellen said on the U.S. push to impose such curbs.
Germany is increasingly wary of China 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.
In a sign of the sensitivity of the matter for Germany, the country led calls urging caution against targeting China under new European Union sanctions over Russia’s invasion of Ukraine, five diplomatic sources told Reuters.
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.
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.
“The United States, for one, is making a lot of money investing in China, which makes you wonder if you can really impose restrictions,” the official said.
British Finance Minister Jeremy Hunt told the Nikkei newspaper the G7 must counter China’s economic coercion, though made no mention of investment controls.
Another less controversial 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.