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G7 finance ministers meet in Japan ahead of leaders' summit

May 12, 2023

Finance ministers and central banks' chiefs are discussing a wide range of topics, including the US debt standoff and preventing Russian sanction evasion. Measures to counter China were also reportedly being debated.

G7 finance ministers and central banks chiefs in Japan
G7 finance ministers and central banks chiefs met in Japan ahead of a leader's summitImage: Issei Kato/REUTERS

Finance leaders of the Group of Seven (G7) are meeting on Friday, for the second day of a three-day summit in the coastal Japanese city of Niigata.

The summit is setting the financial agenda for an anticipated meeting of the grouping's leaders in Hiroshima next week.

What is on the agenda?

On the agenda for Friday's talks are topics like support for Ukraine, global economic growth, inflation and the US standoff over raising its national debt ceiling.

While China plays an important role in most of the issues, it was reportedly not listed as an official topic for the closed-door meetings. 

However, some media reports said the finance ministers could debate, at least informally, possible investment controls against China.

Another major topic that was set to dominate discussions was the domestic political standoff over the US debt ceiling and potential default.

US Treasury Secretary Janet Yellen said that "a default is frankly unthinkable." 

"America should never default. It would rank as a catastrophe," she told reporters ahead of the talks.

German Finance Minister Christian Lindner (R) said he hoped US politicians would come to a 'grown-up' decision on raising the country's debt ceilingImage: Issei Kato/REUTERS

Kazuo Ueda, Japan's central bank governor, said a US default "will become a big move and a big problem, and I think that the Fed alone, for example, may not be able to counteract it."

Speaking on the sidelines of Friday's talks, German Finance Minister Christian Lindner told reporters he hopes that politicians in the US will make a "grown-up" decision on raising the debt ceiling, echoing concerns about an impact on the global economy.

The financial leaders of the G7 advanced economies are also discussing measures to prevent Russia from evading sanctions imposed on Moscow over its war in Ukraine, Japanese Finance Minister Shunichi Suzuki told reporters.

The US said the G7 "will stand with Ukraine for as long as it takes" to bring an end to the conflict.

"We have taken a wave of actions in the past few months to crack down on evasion. And my team has traveled around the world to intensify this work," said Yellen.

US seeking counter-China measures

While the group's current chair, Japan, is seeking to diversify supply chains and reduce its heavy reliance on China, G7 countries have been seemingly wary of how far they could go in countering China.

The US has pushed for stronger measures against Beijing. On Thursday, Yellen said many G7 members were concerned about China's use of "economic coercion" against other countries, and called for measures 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 US push to impose such curbs.

fb/rs (AFP, AP, dpa, Reuters)