US Treasury secretary Janet Yellen has called for “co-ordinated action” by G7 nations against Beijing’s use of economic coercion, as Washington finalises a new outbound investment-screening mechanism aimed at China.
Speaking in Niigata, central Japan, where she is attending a meeting of G7 finance ministers, Yellen said the new US investment restrictions would be “narrowly scoped” and “targeted at technologies where there are clear national security implications”.
“Obviously, it would be most effective if there’s co-ordinated action by a group of like-minded countries and agreement that this is a useful approach,” she said on Thursday, adding she would continue “informal” discussions on the measures with other G7 members.
The US has not finalised the investment-screening mechanism and is not expected to unveil it before a G7 leaders’ summit in Hiroshima next week. Host nation Japan and the US are keen to make economic security one of the summit’s main themes.
The G7 plans to issue for the first time a separate statement on economic security alongside the main summit communiqué. The statement will include a commitment to “collectively deter, respond to and counter economic coercion”, according to documents seen by the Financial Times.
In recent months, China has imposed new sanctions on US weapons companies Lockheed Martin and Raytheon, launched an investigation into US chipmaker Micron, raided US due diligence firm Mintz, and detained a local executive from Japan’s Astellas Pharma group.
President Xi Jinping’s administration is now considering curbing western access to materials and technologies critical to the global car industry, according to a Chinese commerce ministry review.
“I would say that many G7 members share a common concern with this kind of activity and are looking to see what we could jointly do to try to counter this kind of behaviour,” Yellen said.
Ursula von der Leyen, the European Commission president, said in March that Brussels was examining the creation of its own mechanism for scrutinising overseas investment by EU companies in a small range of sensitive technologies that could enhance rivals’ military capabilities.
She added that the bloc needed to ensure its companies’ capital, expertise and knowledge were not used to boost the military and intelligence capacity of “systemic rivals” such as China.
A senior EU official involved with the drafting of the communiqué told the FT that they were confident of agreeing “joint language” regarding scrutiny of outbound investments, but not “a shared mechanism” with the US.
In late March, Japan also unveiled curbs on exporting 23 different kinds of technology, as part of a deal reached with the US and the Netherlands.
The controls would give Japanese authorities oversight of sales of machinery to countries that could potentially produce high-end chips for military use in China and elsewhere. But officials in Tokyo have stressed that the measures are not targeting a specific country.
Yellen also said the G7 would take additional steps to prevent Russia from evading sanctions imposed by the group of advanced economies following its invasion of Ukraine.
“Because these sanctions are having an impact, Russia is trying to get around them. This year, a central part of our strategy is to take further actions to disrupt Russia’s attempts to evade our sanctions.”
