At a press conference in Niigata, Japan this Thursday, U.S. Treasury Secretary Janet Yellen divulged that members of the Group of Seven (G7) are jointly discussing how to respond to China’s use of “economic coercion” against other nations. Noting that Canada, France, Germany, Italy, Japan, the U.K., and the European Union share similar concerns, Yellen detailed that the U.S. government has been internally discussing the issue, but has not established a definitive plan of action yet.

Yellen further emphasized that any action by the U.S. will be “narrowly scoped and targeted at technologies where there are clear national security implications.” She admitted that some restrictions on outbound investment could be a complement to existing measures in the U.S. such as inbound investment reviews and export controls. The U.S. Secretary of Treasury also stated that the G7 would be “looking to see what we could jointly do to try to counter this kind of behavior.”

In recent months, U.S. lawmakers have been pushing the Biden administration to increase scrutiny of investments made by American companies and individuals in foreign countries, particularly China. They have particularly urged President Joe Biden to issue an executive order. It remains to be seen how the situation will develop in the face of increased international gaslighting of the Chinese government's activities.

With the G7 nations moving in unison to articulate and possibly combat China’s “economic coercion” policies, it is quite likely that the development of a joint framework on this issue is not far away. Yellen strongly believes that such actions must be based on considerations of national security, and not aimed at undermining China’s economic competitiveness or ability. This could be an unprecedented step towards ensuring that all nations’ interests remain secure and protected.



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