G20 Talks Stall as US Pushes for Action on China Trade Imbalances
G20 finance ministers clash over trade imbalances and critical minerals as the US urges tougher measures on China.
Finance ministers from the world's largest economies are struggling to find common ground on global trade imbalances, with the United States pressing for a tougher stance on China's export-driven economic model. The discussions, taking place at the G20 summit in Asheville, North Carolina, have hit a roadblock over the wording of a joint communique, particularly regarding references to 'non-market economies' and restrictions on critical minerals.
US Treasury Secretary Scott Bessent has urged member nations to re-examine their trade terms with China and consider raising barriers to Chinese goods. The push comes as Beijing continues to rely heavily on exports, including electric vehicles and semiconductors, to compensate for weak domestic demand. China's total exports surged 23.9% in July compared to the same period last year, intensifying concerns among its trading partners.
The debate is unfolding against a backdrop of global market anxiety. A sell-off in bond markets deepened on Tuesday, with Japan's 10-year government bond yield reaching 3% for the first time since 1996. Rising yields in the US, Europe, and Britain reflect growing worries about energy-driven inflation, potential monetary tightening, and deteriorating fiscal conditions.
European Economy Commissioner Valdis Dombrovskis acknowledged that China is a major source of global imbalances but stressed that other economies also have responsibilities. "China would need to spend more, the US would need to spend less, and the EU would need to invest more," he said, calling for coordinated action from all major economic blocs.
Polish Finance Minister Andrzej Domanski echoed support for the US position, pointing to China's undervalued currency and heavy export subsidies as problems for Europe. He noted that many European countries run significant trade deficits with China and that action is necessary.
Beijing's dominance in critical minerals processing has also become a flashpoint. China imposed export restrictions on rare earths in April, a move that has affected companies beyond the US. Japanese Finance Minister Satsuki Katayama told her counterparts that such arbitrary restrictions harm the global economy and should be withdrawn.
Negotiations on the joint communique remain difficult, with China opposing any language that singles out its economic practices. European nations are also pushing for strong condemnation of Russia's war in Ukraine, adding another layer of complexity to the talks. Several European ministers expressed surprise at seeing Russian Finance Minister Anton Siluanov attend the forum in person for the first time since Moscow's 2022 invasion of Ukraine.