The Group of Seven (G7) finance chiefs’ weekend declaration did not name China as a threat. Still, it hinted that the world’s second-largest economy would dominate this week’s summit in Hiroshima.
At the three-day G7 finance chiefs’ meeting in Niigata, Japan, they held their first outreach in 14 years to win over emerging nations to address China’s expanding global prominence.
Analysts believe the conference with Brazil, Comoros, India, Indonesia, Singapore, and South Korea focused on debt and high-level infrastructure investment, countering China’s Belt and Road plan.
“What’s going on at the G7 is reflecting changes in global order following the loss of U.S. dominance,” said UBS Securities economist Masamichi Adachi. “Nobody can create a grand design with power shifting.”
G7 host, Japan convinced the G7 to begin a new program by 2023 to diversify vital commodities supply chains away from China. The G7 includes the U.S., UK, France, Japan, Italy, Germany, and Canada.
The finance chiefs’ concluding communique did not include a U.S.-proposed idea for narrow investment restrictions to China, indicating a potential split on how far to press Beijing.
At the event, an unnamed Japanese finance ministry official said the proposal was discussed in Niigata but declined to clarify.
Most G7 countries, especially exporters like Japan and Germany, export to China. Japan exports 22% to China.
Analysts say Japan and the U.S. aspire to woo countries, particularly the Global South, through foreign direct investment and help.
Last year, President Joe Biden hosted a U.S.-Africa leaders summit in Washington to strengthen allies amid growing Chinese influence on that continent.
Fumio Kishida visited Egypt, Ghana, Kenya, and Mozambique this month.
The G7 finance chiefs cited Zambia, Ethiopia, Ghana, and Sri Lanka in a Saturday statement urging debt vulnerability reduction in low- and middle-income nations.
Foreign investments in vital infrastructure “may pose risks for economic sovereignty,” thus they must “not undermine the economic sovereignty of host countries.”
In March, Treasury Secretary Janet Yellen said Beijing’s funding left developing countries “trapped in debt,” adding that Washington attempted to undermine China’s influence in international institutions and lending.
“There were talks about coercion” at the G7 financial leaders’ conference, the Japanese finance ministry official added.
According to Reuters, a separate session on China’s “economic coercion” will likely be held at the G7 summit.
“No matter how the G7 want to fence in the Global South, it’s not easy,” said Itochu Economic Research Institute chief economist Atsushi Takeda. “These emerging economies won’t side with either the West or China, while carefully weighing what will be in their best interests.”
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