Blue Green Red Logo
Pakistan Flag gif

Har Pakistani Ki Khabar

Talks of the G7 finance chiefs may be dominated by China and US debt issues.

Image Source - Google | Image by
Dunya News

(Reuters) TOKYO – The Group of Seven (G7) financial chiefs’ summit this week will center on China, with the goal of diversifying supply chains away from the nation while simultaneously attempting to win Beijing’s help in addressing the world’s debt issues.

The G7 affluent democracies are already vulnerable because of their reliance on China, the second-largest economy in the world and the second-largest foreign holder of U.S. debt, but the clashing agendas make matters worse.

The three-day summit beginning on Thursday in the Japanese city of Niigata will be overshadowed by the rising prospect of a U.S. debt default, which may rattle financial markets already uneasy following recent bank failures.

Treasury Secretary Janet Yellen will participate in the G7 financial leaders’ discussions, but U.S. President Joe Biden hinted on Tuesday that he would forego his travel to Hiroshima for the meeting next week if the debt crisis is not handled.

“The dollar is regarded — and Treasury securities –as the bedrock safe asset in the entire global financial system,” Yellen said on Monday, warning of the harm a default might cause to the American economy and financial markets.

“It is the most reliable and secure asset there is, and it would be in danger if the debt ceiling weren’t raised because it would damage the US credit rating. This raises serious concerns.

Japan, the largest holder of U.S. debt globally and the G7 chair this year, is having trouble dealing with the U.S. debt issue.

Other important topics to be covered at this week’s G7 meeting include methods to fortify the global banking system, measures to stop Russia from evading sanctions for its invasion of Ukraine, and hazards to the world economy including persistently rising inflation, according to Japanese officials.

After the summit, Japan plans to release a united G7 statement, they continued.


With a long list of other topics, many of which are related to China, Japan’s host country has left policymakers with little time to savor the renowned rice wine of Niigata.

One of them is an agreement on an ambitious strategy to work with low- and middle-income countries to “away from countries like China” diversify supply chains.

The African Union’s current chair, Comoros, was invited to a Friday outreach meeting by Japanese Finance Minister Shunichi Suzuki, underscoring Japan’s determination to win over the “Global South.”

Brazil, India, Indonesia, and five other nations were invited to the outreach; China was ignored, despite the fact that the issue of rising nations’ debt would be a major topic of discussion

Tokyo, on the other hand, is wooing China to take part in a conference of Sri Lanka’s creditors that it organized. Beijing did not participate in the first round of negotiations as an official participant, but rather as an observer.

China should take part in substantial debt relief for nations experiencing issues as the largest official bilateral creditor in the world, but, as Yellen noted last month, it has long acted as a “roadblock” to critical action.

Given that many emerging economies have been impacted by aggressive U.S. interest rate increases that have raised their dollar-denominated debt burden, it is unclear whether the G7 can persuade them to assist in developing supply chains that are less dependent on China.

According to Takahide Kiuchi, an analyst at Nomura Research Institute, “the debt problems of emerging nations are becoming increasingly serious due in part to the strong dollar.”

The discussion topic demonstrates how the G7 is getting more and more politicized, with a focus on China’s opposition.

Inflation is anticipated to continue to be the major concern for the G7 central bankers. Many of their economies are at a turning point as a result of recent aggressive interest rate rises that are starting to slow development and disrupt the banking sector.

The International Monetary Fund cut its forecast for global growth in 2023 last month and issued a warning that a major escalation of financial system unrest may cause production to drop to levels that are very close to a recession.

Data revealed on Tuesday dispelled officials’ expectations that a robust recovery in the Chinese economy would balance out an anticipated downturn in other areas of the world by revealing that imports fell dramatically and export growth stalled in April.

Latest News

Har Pakistani Ki Khabar

Subscribe Now To Stay Updated with the Latest News!