Avoid trade war with China, says France’s finance minister at G7

Stresa: France’s Finance Minister Bruno Le Maire said Friday the G7 must provide a “united front” against Chinese unfair trade and industrial overcapacity, without sparking a trade war.

As finance ministers and central bankers from the Group of Seven world powers met for the first day of talks in northern Italy’s Stresa, Le Maire told reporters that “the first challenge” was to “define fair trade rules with China.”

“China is our economic partner. But China has industrial overcapacities. And the G7 must present a united front to protect its industrial interests,” Le Maire said.

“All the instruments at our disposal must be used, whether it is at the G7 level or at the European level, to protect our industrial interests and to protect ourselves from unfair trade practices,” he added.

On Wednesday, US Treasury Secretary Janet Yellen urged a similar message, saying the Group of Seven world powers “and the growing number of countries” threatened by China’s industrial overcapacity needed to “present a clear and united front”.

The United States and European Union are concerned that a surge of low-cost Chinese exports fuelled by Chinese government support in key sectors like solar and electric vehicles pose a risk to global markets.

But Le Maire cautioned that a trade war was to be avoided. “We should definitely avoid any kind of trade war, because the trade war is neither in the interest of the US, nor China, nor Europe, nor any country in the world.”

Le Maire said he would propose to the G7 and IMF an “in-depth, common assessment” of the issue.

“We need to have a fair, very frank, and very open dialogue with our Chinese partner, because China is an economic partner.”

Also high on the agenda for the G7 meeting is a plan to finance crucial aid to war-torn Ukraine using the interest generated by the 300 billion euros ($325 billion) of Russian central bank assets frozen by the G7 and Europe.