Group of Seven (G7) leaders are tackling the status quo of global supply chains in several ways. During a three-day meeting in Niigata, Japan, the leaders are debating such issues as diversifying supply chains away from China by building partnerships with low- and middle-income countries through investment and aid. So far, while all agree on the partnership path, how far they should go against China (not a G7 member) is not yet in sync. The U.S. wants stronger steps, Germany is more cautious, and Japan is wary of investment controls and their potential impact on global trade and its economy. Britain’s stance is that the G7 must counter China’s economic coercion.
They agreed that the G7 would set a year-end deadline for putting into play a new scheme that diversifies global supply chains and decided to address regulatory gaps in the banking system. In a draft communique, G7 central banks stated they are “strongly committed” to achieving price stability and anchoring inflation expectations. However, given a potential U.S. default, the communique did not mention a U.S. debt ceiling stalemate.
“Diversification of supply chains can contribute to safeguarding energy security and help us to maintain macroeconomic stability,” the draft communique said. The discussions over the three days among the finance leaders will lay the groundwork for next week’s G7 summit in Hiroshima.
The G7 continued to condemn Russia’s “illegal, unjustifiable, and unprovoked war of aggression” against Ukraine. It said it would continue strengthening coordination in monitoring cross-border transactions between Russia and other countries.
A joint statement after the three-day meeting of the finance ministers and central bank governors made no specific mention of China. Still, it underscored the challenges the Asian powerhouse poses to the G7—and developing nations. Japan also invited key players with ties to China—Brazil, India, Singapore, and South Korea—to the finance chiefs’ meeting to discuss debt vulnerabilities experienced by developing nations and ways to make supply chains more robust.