Analysts question whether G-20 language yields coordinated action
G-20 finance ministers and central-bank chiefs closed their meeting in Asheville, N.C. on Tuesday with a joint statement that took an unusually coordinated line on China’s industrial model. The statement, issued by the U.S. Treasury Department on behalf of the group’s members, did not name Beijing. It told countries with “excessive and persistent external surpluses” to end policies that “result in an overreliance on exports for growth” and to “eliminate nonmarket policies” and “remove distortions that constrain domestic consumption.”
Any doubt about the target of the language was dispelled in a footnote, which identified China as the only dissenter. Beijing objected to several sections, including the one on export overreliance, the footnote said.
The intervention came as concerns about China’s manufacturing and export push have spread beyond the United States. Governments across Europe and Asia have grown increasingly worried that domestic industries — in autos, electronics and heavy machinery — will not survive the flood of Chinese goods.
The statement’s language echoed longstanding objections to China’s economic model. China ran a $1.2 trillion trade surplus last year, according to the document.
U.S. Treasury Secretary Scott Bessent said the group’s members had agreed that “pushing out a never-ending stream of cheap exports is not sustainable.”
Japanese Finance Minister Satsuki Katayama said “everyone’s feelings have crossed a threshold” on China. She added that “even before Japan said anything, other countries came forward to say that we had better not wait any longer to make our direction clear,” and noted that even Russia did not oppose the statement.
The worry extends well beyond the G-20’s wealthier members. A February report by the French government titled “The Chinese Steamroller” said China’s export surge threatened the “very core of Europe’s productive system.” Indonesia, one of the group’s poorer members, has publicly said the wave of Chinese imports is hurting its domestic industry.
China’s response to the communiqué was relatively restrained. Beijing said Wednesday that the G-20 should “act in an impartial way based on consensus.” Earlier this year, China’s Ministry of Commerce said it opposed “hyping the so-called excess capacity of China” and attributed export growth to the country’s economies of scale.
Analysts cautioned, however, that it was premature to read the G-20’s language as a prelude to coordinated action. The U.S. has built a tariff wall against Chinese goods, but other countries have not followed suit, and many of those governments have their own grievances with Washington.
“It’s not so easy to agree on what might be done about it,” said Deborah Elms, head of trade policy at the Hinrich Foundation in Singapore. Countries are wary of working with an unpredictable U.S. administration, she said, and worry about potential Chinese retaliation.
Last year, Beijing responded to American tariffs by restricting rare-earth exports to every country, pummeling global manufacturers. China also cut off certain mineral exports to Japan after a dispute over Taiwan.
Alicia Garcia-Herrero, chief Asia economist for the French investment bank Natixis, said she did not believe the other G-20 signatories envisioned a confrontation with Beijing. The language in the document was “generic enough that other capitals can sign without owning a bilateral fight with Beijing,” she said.
Han Lin, China managing director for the U.S. consulting firm the Asia Group, struck a different note. “The G-20 has rarely spoken with this degree of consensus on nonmarket distortions and overcapacity,” he said. “It signals growing convergence among major economies that Chinese industrial policy is creating spillovers they increasingly feel compelled to address.”