G-7 talks focus on ways to fortify banks, supply chains as China accuses group of hypocrisy

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Group of Seven (G7) finance ministers and central bank governors attend a group photo session ahead of their meeting in Niigata, Japan, on Friday, May 12, 2023. From top left to right, Secretary-General of the Organisation for Economic Cooperation and Development (OECD) Mathias Cormann, President of the Eurogroup Paschal Donohoe, Deputy Governor of the Bank of England Jon Cunliffe, Commissioner for the Economy of European Commission Paolo Gentiloni, Governor of the Central Bank of France Francois Villeroy de Galhau, French Director General of the Treasury Emmanuel Moulin, European Central Bank President Christine Lagarde, British Chancellor of the Exchequer Jeremy Hunt, International Monetary Fund Managing Director Kristalina Georgieva, World Bank Group President David Malpass, Chair of the Financial Stability Board Klaas Knot. From front row from left, Governor of the Bank of Canada Tiff Macklem, Canadian Finance Minister Chrystia Freeland, Governor of the Bank of Italy, Ignazio Visco, Italian Finance Minister Giancarlo Giorgetti, Governor of the Bank of Japan Kazuo Ueda, Japanese Finance Minister Shunichi Suzuki, Joachim Nagel, president of the Deutsche Bundesbank, German Finance Minister Christian Lindner, U.S. Federal Reserve Chairman Jerome Powell, and U.S. Treasury Secretary Janet Yellen. (AP Photo/Shuji Kajiyama)

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U.S. Treasury Secretary Janet Yellen, right, and Federal Reserve Chairman Jerome Powell chat prior to a group photo session of the G7 meeting of finance ministers and central bank governors, at Toki Messe in Niigata, Japan, Friday, May 12, 2023. (AP Photo/Shuji Kajiyama)

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U.S. Treasury Secretary Janet Yellen, center, reacts prior to a group photo session of Group of Seven (G7) finance ministers and central bank governors with invited non-G7 countries’ counterparts, at Toki Messe in Niigata, Japan, on Friday, May 12, 2023. (AP Photo/Shuji Kajiyama)

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British Chancellor of the Exchequer Jeremy Hunt, front right, talks with Indonesia’s Finance Minister Sri Mulyani Indrawati, prior to a group photo session of Group of Seven (G7) finance ministers and central bank governors with invited non-G7 countries’ counterparts, at Toki Messe in Niigata, Japan, on Friday, May 12, 2023. (AP Photo/Shuji Kajiyama)

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Group of Seven finance ministers and central bank governors wait for a family photo session at Toki Messe in Niigata, Japan, on Friday, May 12, 2023. From left to right, Italian Finance Minister Giancarlo Giorgetti, Japanese Finance Minister Shunichi Suzuki, Joachim Nagel, president of the Deutsche Bundesbank, German Finance Minister Christian Lindner, U.S. Federal Reserve Chairman Jerome Powell, British Chancellor of the Exchequer Jeremy Hunt and U.S. Treasury Secretary Janet Yellen. (AP Photo/Shuji Kajiyama)

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U.S. Treasury Secretary Janet Yellen, right, and Federal Reserve Chairman Jerome Powell wait for a group photo session of the G7 meeting of finance ministers and central bank governors, in Niigata, Japan, Friday, May 12, 2023. (AP Photo/Shuji Kajiyama)

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Group of Seven (G7) finance ministers and central bank governors attend a family photo session ahead of their meeting in Niigata, Japan, on Friday, May 12, 2023. (AP Photo/Shuji Kajiyama)

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Group of Seven (G7) finance ministers and central bank governors attend a family photo session at Toki Messe in Niigata, Japan, on Friday, May 12, 2023. (AP Photo/Shuji Kajiyama)

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U.S. Treasury Secretary Janet Yellen, right, and German Finance Minister Christian Lindner pose for a photo during the bilateral meeting on the sidelines of the G7 meeting of Finance Ministers and Central Bank Governors, at Toki Messe in Niigata, Japan, Friday, May 12, 2023. (AP Photo/Shuji Kajiyama)

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U.S. Treasury Secretary Janet Yellen, right, and German Finance Minister Christian Lindner talk during the bilateral meeting on the sidelines of the G7 meeting of Finance Ministers and Central Bank Governors, at Toki Messe in Niigata, Japan, Friday, May 12, 2023. (AP Photo/Shuji Kajiyama)

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U.S. Treasury Secretary Janet Yellen, right, and German Finance Minister Christian Lindner, left, hold the bilateral meeting on the sidelines of the G7 meeting of Finance Ministers and Central Bank Governors, at Toki Messe in Niigata, Japan, Friday, May 12, 2023. (AP Photo/Shuji Kajiyama)

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U.S. Treasury Secretary Janet Yellen, right, and German Finance Minister Christian Lindner shake hands during the bilateral meeting on the sidelines of the G7 meeting of Finance Ministers and Central Bank Governors, at Toki Messe in Niigata, Japan, Friday, May 12, 2023. (AP Photo/Shuji Kajiyama)

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German Finance Minister Christian Lindner, left, speaks to U.S. Treasury Secretary Janet Yellen during the bilateral meeting on the sidelines of the G7 meeting of Finance Ministers and Central Bank Governors, at Toki Messe in Niigata, Japan, Friday, May 12, 2023. (AP Photo/Shuji Kajiyama)

By ELAINE KURTENBACH

Bank runs, cyber security and building more reliable supply chains to ensure economic security were among items on the agenda of closed-door financial talks Friday in Japan by the Group of Seven advanced economies.

Tensions with China, and with Russia over its war on Ukraine, loomed large on the wide horizon of issues the G-7 is tackling this year in Japan, its only Asian member.

But while G-7 finance ministers and central bank chiefs discussed ways to protect the international rules-based order and prevent what they are calling “economic coercion” by China, Beijing lashed back, accusing the club of wealthy nations of hypocrisy.

China is a victim of economic coercion, Chinese Foreign Ministry spokesperson Wang Wenbin said Friday.

“If any country should be criticized for economic coercion, it should be the United States. The U.S. has been overstretching the concept of national security, abusing export controls and taking discriminatory and unfair measures against foreign companies,” Wang said in a routine news briefing.

China accuses Washington of hindering its rise as an increasingly affluent, modern nation through trade and investment restrictions that the United States says are needed to protect American economic security.

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Speaking before the talks began, U.S. Treasury Secretary Janet Yellen said such measures are “narrowly targeted” and focused on national security.

“It’s not focused on undermining China’s economic competitiveness or preventing them to advance economically,” Yellen said.

Asked what G-7 countries mean by trying to prevent “economic coercion,” namely by China, Yellen cited trade actions by Beijing against Australia as one example.

“There have been examples of China using economic coercion on countries that take actions that China’s not happy with from the geopolitical perspective,” she said. “We in the G-7 share a common concern with this kind of activity and are looking to see what we can try to do to try to counter this kind of behavior.”

China’s relations with the 27-nation European Union, which is also a member of the G-7, have also been frayed by friction over trade and over its tacit support for Russia.

Leaders attending the talks in Niigata said they would be considering ways to prevent countries from skirting sanctions against Moscow meant to hinder its ability to continue the war.

Both the U.S. and European Union maintain they are not advocating “decoupling,” or dismantling extensive economic ties with China, but support “de-risking” relations to avoid becoming too dependent on China.

For its G-7 presidency, Japan has prioritized launching a partnership with low- and middle-income countries to build “robust supply chains” to help cut carbon emissions. One key area of concern for all G-7 countries is the heavy concentration in China of suppliers of rare earths materials needed in many high-tech products.

Meanwhile, recent failures of banks in the U.S. and Europe have added to the complexity of steering the world economy toward a sustained recovery from the pandemic while cooling inflation that surged to multi-decade highs in the past year.

“It’s become clear that financial worries can spread in an instant via social networking sites, and online banking, allowing money withdrawals outside business hours, can cause bank runs,” Japanese Finance Minister Shunichi Suzuki said Thursday.

The collapses of Silicon Valley Bank and other lenders stemmed largely from the pressure of interest rate hikes that, by making borrowing more expensive, are designed to slow business activity and cool inflation.

The meetings in Niigata are a good chance to “compare notes and to see how we can make the world a little bit more stable and reach the price stability that we very much want to arrive at in short order,” Christine Lagarde, head of the European Central Bank, said in videotaped comments posted online.

Overhanging the financial experts’ talks is the question of whether President Joe Biden and Congress will come to an agreement on raising the ceiling on the national debt before the U.S. government runs out of money to pay its bills. Yellen said a default on the national debt would be catastrophic and was “unthinkable.”

A meeting between Biden and lawmakers on the issue was pushed back to May 18 to allow staff talks to continue over the weekend. Administration officials portrayed it as a positive step and it did not appear to indicate a breakdown in talks.

The three days of talks in this port city on the Sea of Japan are the last in a series of ministerial meetings to prepare for a summit of G-7 leaders next week in Hiroshima.

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Associated Press journalist Haruka Nuga contributed.