G7 finance chiefs discuss Ukraine loan and China’s trade policies

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24th May 2024 – (Stresa) Financial leaders from the Group of Seven industrial democracies gathered in Italy for a two-day meeting on Friday with the aim of presenting a unified stance on providing a loan to Ukraine and countering China’s perceived “unfair” industrial practices.

However, officials’ comments prior to the meeting in Stresa, northern Italy, indicate that no concrete details will emerge regarding the U.S. proposal for a loan to Ukraine backed by future income from approximately $300 billion of frozen Russian assets.

“We will be proposing to utilize windfall profits from the Russian assets in the years to come,” stated French Finance Minister Bruno Le Maire, highlighting the need to compare proposals and determine the most effective and efficient course of action.

U.S. Treasury Secretary Janet Yellen has mentioned that the loan could amount to around $50 billion, but no definitive figures have been agreed upon. Other G7 officials involved in the negotiations expressed caution, citing complex legal and technical aspects that need to be addressed.

On Saturday, the finance ministers will be joined by Ukraine’s Finance Minister Serhiy Marchenko, whose country is contending with a Russian offensive in the north and east, more than two years after Russia’s invasion.

German Finance Minister Christian Lindner emphasised that many questions regarding the loan proposal remained unanswered, and he did not anticipate any concrete decisions being made in Stresa. Negotiations are expected to continue, with the goal of making progress by the time G7 heads of government gather in Puglia, southern Italy, from 13th to 15th June.

Additionally, the G7 meeting will focus on addressing China’s growing export strength. The United States recently imposed significant tariff hikes on various Chinese imports, including electric vehicle batteries, computer chips, and medical products. While the US is not urging its partners to take similar measures, Yellen called on G7 countries to stand together in solidarity.

French Finance Minister Le Maire stressed the importance of avoiding a trade war with China but emphasised the need for the G7 to protect its industrial interests. He noted concerns over unfair trade practices, substantial subsidies, and China’s industrial overcapacity.