G-7 finance chiefs unite to condemn Russia and counter China

Under the shadow of swelling risks to the global economy, finance chiefs from the world’s wealthy nations presented a united front with more support for Ukraine, a plan for diversifying supply chains and a vow to fill gaps in financial regulation.

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The Group of Seven’s ease in agreeing on a statement after three days of talks in Niigata, Japan, was in stark contrast with the discord seen at the Group of 20 finance ministers and central bank governors meeting in Bengaluru, India, less than three months earlier, which ended without the usual communique.

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The difference: no China or Russia. While condemnation of “Russia’s War of Aggression” against Ukraine was front and center of the 14 page statement, China didn’t get a direct mention. Yet there were thinly veiled plans to counter its dominance of global supply chains and growing sway over the Global South.

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U.S. Treasury Secretary Janet Yellen couldn’t escape the debt ceiling impasse. In an interview with Bloomberg Television, she said the federal government will have to renege on some payments if Congress doesn’t raise the debt limit.

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Here’s a look at what came out of three days of talks:

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Ukraine aid

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Aid for Ukraine through early 2024 was nudged up to $44 billion in a move that enabled the International Monetary Fund to approve $15.6 billion of support over four years. “We call for an immediate end of Russia’s illegal war against Ukraine, which would clear one of the biggest uncertainties over the global economic outlook,” the finance chiefs said in the statement.

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Macro outlook

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The leaders flagged the need to stay “agile and flexible” on economic policy amid heightened uncertainties for the global economy. Central banks “will ensure inflation expectations remain well anchored and will clearly communicate policy stances to help limit negative cross-country spillovers,” the communique added.

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Financial stability

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The need to ensure global financial stability was a prominent theme following the collapse of Silicon Valley Bank and First Republic Bank, and the takeover of Credit Suisse. While the G-7 maintained its stance that the global financial system remains “resilient” in the communique, officials also sounded the alarm against complacency.

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Supply chains

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Trade disruptions were also high on the list of concerns at the gathering, with implicit regard to China. Finance chiefs proposed a new partnership that’ll be open to other nations and will target clean energy, as previously reported by Bloomberg News. They aim to launch the partnership for Resilient and Inclusive Supply-chain Enhancement, or RISE, by the end of this year at the latest, the communique showed.

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Debt

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To build consensus beyond the G-7, finance chiefs were careful to include other nations in the conversation, with a session dedicated to pledging more support to lower and middle-income countries and helping them secure resources from IMF facilities. The communique named Zambia, Ethiopia and Ghana as countries that have recently made or are expected to see some progress under the G-20’s so-called Common Framework.

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Other commitments

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The finance chiefs also affirmed commitments on climate change mitigation and adaptation, strengthening the governance and finance of the global health architecture, and continued work toward hashing out crypto regulations, without making any significant new advances on those fronts.

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Attention now shifts to the G-7 leaders meeting in Hiroshima on May 19-21.

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(With assistance from Alessandra Migliaccio, Christopher Condon, Kamil Kowalcze, Joe Mayes, Emi Urabe, Toru Fujioka and Erica Yokoyama.)

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this story was originally published May 13, 2023, 4:26 PM.