G-7 leaders agree that 'de-risking' China is not possible. | WUGT News Business


G-7 leaders agree that 'de-risking' China is not possible.

G-7 leaders agree that 'de-risking' China is not possible.

Economists warn that the impact of a growing rift between China and the U. S. could cause further damage.

Posted by on May 23, 2023 550

The G-7 leaders said that they were not decoupling from the world or turning inwards in a statement released at the weekend, as they met in Hiroshima. "At the time, we acknowledge that economic resilience requires derisking and diversification."

Leaders said, "We will address the challenges presented by China's nonmarket policies and practices that distort global economies. We will combat malign practices such as illegitimate data or technology disclosure."

He explained that it means diversifying supply chains "so we are not dependent on one country for our product. It means resisting coercion economically and countering harmful business practices that harm our workers. It means protecting a small set of advanced technologies that are critical to our national security."

Janet Yellen, U. S. Treasury secretary, said that China's behavior "should be of concern to us all" after the G-7 Finance Ministers and Central Bank Governors' Meeting earlier this month.

"There are examples of China using economic pressure on countries who take actions that China is not happy with, from a geopolitical standpoint," she said. She cited China's trade dispute with Australia and Lithuania.

In their statement, the G-7 leaders stated that "We will foster resilience against economic coercion. We also recognize that certain advanced technologies could be used against our national security, without unduly restricting trade and investment."

The world's top democracies have said that they will "reduce excessive dependence in our critical supply chain" while highlighting the need to work with China. They cite its role in the international community and its size as reasons for their cooperation.

"We are prepared to build stable and constructive relations with China. We recognize the importance of engaging directly with China and expressing our concerns. We act in our nation's interest."

Such rules would mean stricter guidelines to U. S. firms who will be required by law to notify the government about new investments in Chinese technology firms. According to the publication, deals in critical sectors like microchips will be banned.

Goldman Sachs economists Hui Shan, and Andrew Tilton, said that they expected the Committee on Foreign Investment in The United States (CFIUS) to take steps ahead of the weekend G-7 summit. CFIUS is a U. S. Government agency that reviews foreign investment deals in the U. S. in order to determine if it compromises the national security of the country.

In a preview of the set measures earlier this month, they said that "more attention may be paid to refining existing tariff, export control, and investment regimes, once basic frameworks have been in place."

We do not expect significant restrictions on secondary market investments.

After Washington concluded negotiations with Taiwan over a number of trade items on Friday, a possible deal on the bilateral "21st Century Trade Initiative" was reached.

In a press release, the United States Trade Rep stated that the first agreement included: customs administration, trade facilitation, good regulation practices, domestic services regulation, anticorruption, and small and mid-sized enterprises.

The immediate focus was on building Taiwan's capabilities to deter a war, wrote U. S. political economics Alec Phillips & Tim Krupa earlier this month. They added that they saw "good odds" of the U. S. Congress passing additional support for existing schemes.

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