G7 finance ministers urge action on economic imbalances, some point to China

PARIS — Finance ministers and central bank governors from the Group of Seven (G7) agreed on Tuesday that growing trade imbalances in the global economy must be addressed, with U.S. Treasury Secretary Scott Bessent warning allies about the risks posed by a surge of low-cost Chinese exports.

The G7 officials met in Paris for a second day of talks focused on the economic impact of the Iran conflict, volatility in global bond markets, and growing tensions in international trade. While the discussions highlighted broad concerns, the group stopped short of announcing concrete policy measures.

Bessent said China’s continued industrial overcapacity and weak domestic demand were driving a wave of exports that could damage economies in Europe and elsewhere.

“Unfortunately, I was right,” Bessent told Reuters after the meeting, referring to previous warnings about China’s export strategy. “And the Chinese have hit the accelerator, so they're manufacturing more.”

He added that sluggish consumer demand in China was forcing more goods into overseas markets, increasing pressure on global trade.

Japanese Finance Minister Satsuki Katayama also pointed to China as a major source of global economic imbalances, citing concerns over industrial policies and what she described as distortive, non-market practices.

Katayama said there was growing pressure for G7 leaders to agree on coordinated action during their summit next month in Evian-les-Bains, France.

French Finance Minister Roland Lescure called for a broader approach, saying trade imbalances were not caused solely by Chinese overproduction. He noted that high consumption in the United States and underinvestment in Europe were also contributing factors.

“We all share a common view. Those imbalances are not sustainable,” Lescure told reporters after the meeting.

Lescure said the G7 discussed boosting investments, improving productivity, and reducing policies that distort markets. Officials also talked about diversifying supplies of rare earths and critical minerals to reduce dependence on China.

The issue has become increasingly important as G7 governments seek to secure supply chains for industries such as electric vehicles, renewable energy, and defense technology.

The ministers also addressed the ongoing Iran conflict, agreeing it was “imperative” to restore safe and open transit through the Strait of Hormuz, a key route for global energy shipments.

U.S. President Donald Trump said on Monday he had paused a planned strike against Iran, raising hopes for renewed negotiations over Tehran’s nuclear program.

However, differences remained within the G7 over how to handle Iran and Russia. Bessent urged European countries to strengthen enforcement of financial sanctions on Iran, while calling on Asian allies to crack down on Iran’s so-called shadow fleet used for oil transfers.

The group also reaffirmed its support for Ukraine and condemned Russia’s actions. Still, tensions emerged after Washington extended a sanctions waiver allowing certain countries to continue purchasing Russian seaborne oil for another 30 days.

European Economic Commissioner Valdis Dombrovskis acknowledged disagreements within the group, saying G7 countries were “not always 100% aligned on everything.”

The ministers pledged to deepen cooperation on critical minerals and explore measures such as inventory reserves and pricing mechanisms aimed at preventing China from undercutting alternative suppliers. -Reporting by Alistair Smout, Leigh Thomas, David Lawder, Maria Martinez and Makiko Yamazaki; Additional reporting by Dominique Vidalon and Sudip Kar-Gupta; Editing by Susan Fenton, Alexandra Hudson, Nick Zieminski and Stephen Coates/Reuters