By Leigh Thomas
PARIS, May 18 (Reuters) – G7 finance ministers gathering in Paris on Monday will try to find common ground on tackling global economic tensions and coordinating critical raw material supplies, even as geopolitical differences threaten to test the group’s cohesion.
The two-day meeting follows a summit between U.S. President Donald Trump and Chinese President Xi Jinping in Beijing that yielded few concrete economic breakthroughs, as tensions over Taiwan and trade simmered beneath a display of diplomatic cordiality.
At the core of the Paris agenda will be what French Finance Minister Roland Lescure described as deep-seated global economic imbalances that are fuelling trade friction and risk a turbulent unwinding in financial markets.
“The way the global economy has been developing for the past 10 years or so is clearly unsustainable,” he said, pointing to a pattern in which China under-consumes, the United States over-consumes and Europe under-invests.
UPDATE FROM US-CHINA SUMMIT
Lescure, who will host the talks, said the G7 offered an opportunity for frank dialogue among allies at a time of widening disagreements with Washington.
“These discussions are not easy. I’m not going to tell you that we agree on everything, including, of course, first and foremost with our American friends,” he told journalists ahead of the meeting.
Finance ministers will be looking for an update on U.S.-China relations following the Trump-Xi summit and the latest U.S. efforts to re-open the Strait of Hormuz, as the Trump administration allowed a sanctions waiver on Russian seaborne oil to lapse on Saturday.
Merely agreeing each side bears some responsibility for the trade and capital flow imbalances would be a success, French officials involved in preparations said, though the U.S. side is likely to be reluctant.
FALLOUT FROM MIDEAST CONFLICT
“I’d be shocked if they’re going to sign on to the idea this is the U.S.’s fault in some way,” said Philip Luck, director of the economics program at Washington’s Center for Strategic and International Studies.
Ministers are also due to discuss the economic fallout from the Mideast conflict and volatility on global bond markets, which are of particular concern to Japan.
Britain’s finance ministry said Rachel Reeves would “press for coordinated action to limit inflation and supply chain pressures, and restore freedom of navigation through the Strait of Hormuz” at the meeting, and also reassert the government’s desire to reduce trade barriers between Britain and the European Union.