Global Courant 2023-04-13 08:43:07
Financial leaders of the Group of Seven (G7) have committed to taking action to preserve the stability of the global financial system following the recent banking turmoil and to give low- and middle-income countries a greater role in diversifying supply chains to help them make it more resilient.
Their communiqué did not mention China by name, but the language of the supply chain fits into efforts by industrial democracies to work together to become less dependent on the Asian manufacturing powerhouse for battery minerals, semiconductors and other strategic commodities.
“We are committed to collectively empowering low- and middle-income countries to play a greater role in supply chains through mutually beneficial collaboration by combining finance, knowledge and partnership, which will help contribute to sustainable development and supply chain resilience globally,” said the G7. That is what the finance ministers and central bank governors said in a statement on Wednesday.
The financial leaders of the G7 countries – Canada, France, Germany, Italy, Japan, the United Kingdom and the United States – met on the sidelines of International Monetary Fund (IMF) and World Bank meetings in Washington, DC. They said they discussed recent developments in the financial sector following the bankruptcy of two US banks and the forced sale of troubled global lender Credit Suisse.
Shunichi Suzuki, the finance minister of G7 host Japan, said stability had returned to the financial system after strong action by policymakers
“We will continue to closely monitor developments in the financial sector and stand ready to take appropriate measures to preserve the stability and resilience of the global financial system,” said G7 finance leaders.
Ministers said supply chains are needed to achieve efficiency and resilience, help maintain macroeconomic stability and make economies more sustainable. The statement cited the need to diversify “highly concentrated” supply chains for clean energy technologies.
“In this endeavor, we will be steadfast to protect our shared values while maintaining economic efficiency by preserving the free, fair and rules-based multilateral system and international cooperation,” said the G7 finance leaders. they used the language often used to exclude China and other undemocratic countries.
Suzuki said the language was not specifically aimed at China, but added that the G7 group viewed a high concentration of supply chains in a single country as undesirable, noting that many supply chains were highly concentrated in China.
The IMF warned in its latest economic forecasts that the fragmentation of the global economy into geopolitical blocs was a major factor in reducing longer-term growth potential, with growth expected to reach just 3 percent in 2028. That is the lowest five-year forecast since the start of the IMF. the release of such forecasts in 1990.
But French finance minister Bruno Le Maire, who took part in the G7 meeting, said such diversification away from China and alliances with allies was necessary.
“When it comes to producing green hydrogen, or artificial intelligence, or semiconductor chips, or electric batteries, or other strategic goods, we need to be more independent,” Le Maire told reporters.
In addition to closer cooperation with developing countries on supply chains, G7 finance officials pledged to encourage joint research and development efforts between G7 members and other “interested parties”.
They said they would enable the private sector in their own country to diversify their supply chains, through a transparent and predictable use of public financing tools that can catalyze private resources.
Ministers also pledged to support education, training and skills development “underpinned by good governance and human rights compliance”, and to reduce greenhouse gas emissions and improve environmental protection in their supply chains.
