FILE PHOTO: U.S. Secretary of the Treasury Janet Yellen attends the G7 Finance Ministers and Central Bank Governors' Meeting in Stresa, Italy May 24, 2024. REUTERS/Massimo Pinca/File Photo
NEW YORK: China’s engagement in the global system of commerce was roundly criticised by Group of Seven (G7) finance chiefs in a show of unity accompanied by a threat of further escalation.
The club of rich-world ministers and central bankers concluded its gathering in the Italian lakeside town of Stresa last Saturday with a communique that cited the world’s second-biggest economy by name and accused the country of hurting the economies of its trade partners.
“While reaffirming our interest in a balanced and reciprocal collaboration, we express concerns about China’s comprehensive use of non-market policies and practices that undermines our workers, industries, and economic resilience,” they said. “We will continue to monitor the potential negative impacts of overcapacity and will consider taking steps to ensure a level playing field.”
Those words of warning followed the Biden administration’s announcement late last Friday to reimpose tariffs on hundreds of goods imported from China. The escalation in rhetoric could just be the prelude to further tensions if Donald Trump regains the White House in US elections later this year.
America remains the key protagonist in pressuring China, though earlier in the week, Treasury Secretary Janet Yellen stressed that G7 participants from Germany, France and the European Union also harboured grievances. French Finance Minister Bruno Le Maire was one participant pressing for a united front.
“The issue of tariffs toward China is on objective fact, not a political choice,” Italian Finance Minister Giancarlo Giorgetti, chair of the meeting, told reporters in a final press conference. “When the United States, with its Inflation Reduction Act, started this type of policy, this forced a reflection, also within the European Union, on how to behave in these situations.”
Washington will allow tariff exclusions to expire on about half of 400 products that had been spared, the office of the US Trade Representative announced last Friday. A further 164 exclusions will be extended through May of next year.
Earlier in the week, China signalled it’s ready to unleash tariffs as high as 25% on imported cars with big engines, highlighting how tussles over automobiles – one of Europe’s biggest industries – loom large in the current dispute.
Chinese manufacturer BYD Co, which overtook Tesla Inc last year as the biggest global electric vehicle maker, plans to bring its Seagull hatchback to Europe next year. After tariffs and modifications to meet European standards, executives expect to sell it for less than 20,000 on the continent.
Language within the G7 communique hints at possible retaliatory measures from the group as a whole.
“We will work to make our supply chains more resilient, reliable, diversified, and sustainable, and to respond to harmful practices, while safeguarding critical and emerging technologies,” the ministers said. “We will consider, when necessary, appropriate measures to promote de-risking and diversification of supply.”
There remains a spectrum of views within the G7 over just how far to raise the temperature in the sphere of global trade.
UK Chancellor of the Exchequer Jeremy Hunt, for example, said in an interview with Bloomberg Television that his country won’t rush to impose measures.
“It is really important that the world does not unintentionally creep back into protectionism,” he said. “Our starting point is that we really think hard before imposing tariffs or trade remedies. But we are still going through the detailed work necessary to come to a decision.”
Giorgetti himself acknowledged varying degrees of concern within the group.
“It’s undeniable that there are different points of view on how to handle this issue, and we have to face it aware of the possible retaliation from China,” he said.
Even so, the overall outcome of a meeting originally expected to focus most on engineering aid for Ukraine, along with discussions on the global economy, now encompasses the most assertive language the group has ever coalesced around on China in a joint document that usually barely mentions trade. — Bloomberg
