Communiqué promises a greater role for low- and middle-income countries in diversifying supply chains.
The Group of Seven (G7) financial leaders have pledged to take action to maintain the stability of the global financial system in the wake of the recent banking turmoil and to give low- and middle-income countries a greater role in diversifying supply chains to make them more resilient .
Their communiqué did not mention China by name, but the supply chain language fits with “friend-shoring” efforts by industrial democracies to work together to reduce dependence on Asia’s manufacturing powerhouse for battery minerals, semiconductors and other strategic goods.
“We are committed to collectively empowering low- and middle-income countries to play a bigger role in supply chains through mutually beneficial collaboration, combining finance, knowledge and partnerships that contribute to sustainable development and supply chain resilience around the world,” the G7 finance ministers and central bank governors said in the statement on Wednesday.
The finance chiefs of the G7 nations – Canada, France, Germany, Italy, Japan, the United Kingdom and the United States – met on the sidelines of the International Monetary Fund (IMF) and World Bank meetings in Washington, DC. They said they discussed recent developments in the financial sector following the collapse of two US banks and the forced sale of troubled global lender Credit Suisse.
Shunichi Suzuki, finance minister of G7 host Japan, said the financial system has regained stability after strong action by policymakers
“We will continue to closely monitor developments in the financial sector and stand ready to take appropriate measures to maintain the stability and resilience of the global financial system,” G7 finance leaders said.
Ministers said supply chains must achieve efficiency and resilience to help maintain macroeconomic stability and make economies more sustainable. The statement cited the need to diversify “highly concentrated” clean energy technology supply chains.
“In this endeavor, we will remain steadfast to protect our shared values while maintaining economic efficiency by upholding the free, fair and rules-based multilateral system and international cooperation,” the G7 financial leaders said, using one language , which is often used to exclude China and other undemocratic nations.
Suzuki said the language was not specifically aimed at China, but added that the G7 group views high concentration of supply chains in a single country as undesirable, noting that many supply chains are highly concentrated in China.
The IMF warned in its latest economic forecasts that the fragmentation of the global economy into geopolitical blocs is a key factor in reducing longer-term growth potential, with growth expected to be just 3 percent in 2028. This is the lowest five-year forecast since the IMF began publishing such forecasts in 1990.
But French Finance Minister Bruno Le Maire, attending the G7 meeting, said such diversification away from China and alliances with allies are necessary.
“In terms of producing green hydrogen, artificial intelligence or semiconductor chips, electric batteries or other strategic goods, we need to be more independent,” Le Maire told reporters.
In addition to working more closely with developing countries on supply chains, G7 finance officials pledged to encourage joint research and development efforts among G7 members and other “stakeholders”.
They said they would empower the private sector in their own countries to diversify their supply chains through transparent and predictable use of public financial instruments that can catalyze private resources.
Ministers also pledged to support education, training and skills development “underpinned by good governance and respect for human rights” and to reduce greenhouse gas emissions and improve environmental protection in their supply chains.
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