G7 Finance Ministers Call for Addressing Global Economic Imbalances, Some Pointing to China

(CNA, Paris, 19th, Comprehensive Foreign Report) Group of Seven (G7) finance ministers stated today that amid global economic fragmentation, the current trade imbalances are unsustainable. U.S. Treasury Secretary Scott Bessent argued that countries should further strengthen trade protection measures to counter the influx of cheap Chinese goods. The G7 finance ministers and central bank governors began the second day of their meeting in Paris, France. In an exclusive interview with Reuters, Bessent said he had previously warned his European counterparts to adopt more trade protection measures to fend off a surge in exports driven by China's weak domestic demand and overcapacity. "Unfortunately, I was right," he told Reuters in an interview after the meeting, adding that "China is putting the pedal to the metal to accelerate manufacturing expansion." He added that as China's sluggish domestic demand drags on economic growth, more goods are being diverted to export markets. Japanese Finance Minister Satsuki Katayama also attributed a large part of the global trade imbalance to China. Katayama stated, "There is a general consensus among countries that China has issues such as industrial policies and distorted, non-market behaviors, and it seems to have no intention of correcting these imbalances on its own." She added that this would put pressure on G7 leaders to reach a consensus on concrete actions at their summit in Evian-les-Bains, France, in June this year. However, Roland Lescure, the finance minister of France, which holds the G7 presidency this year, offered a more balanced view. He believes that U.S. overconsumption, insufficient investment in Europe, and Chinese overproduction are all significant factors contributing to global imbalances. He pointed out that these phenomena exacerbate trade frictions and pose risks of turmoil in financial markets. "We all agree that such an imbalanced state cannot continue," Lescure told the media after the meeting. He called on the International Monetary Fund (IMF) to strengthen its monitoring and analysis work and pledged to continue discussions. He also revealed that the finance ministers discussed the issue of diversifying the supply of rare earths and critical minerals. Lescure said that G7 member countries agreed that their national policies should include plans to boost investment, enhance productivity, and reduce market-distorting policies. He cited China's massive export surplus as part of the global imbalance problem, but noted that progress in related discussions within the Group of 20 (G20), of which China is a member, has been limited.