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Reducing their deep dependence on supply chains with China at
their center has become a top priority among Western economies
as Beijing's threats to Taiwan heighten geopolitical risks in
Asia. The trade disruptions of the pandemic years have also
added urgency to the desire to limit their dependence on China.
"The global economy is facing increasing downward pressures," Yi
Gang, governor of the People's Bank of China, said in a
statement to the International Monetary Fund's steering
committee.
"Despite an overall easing of supply chain tensions, they
continue to be challenged by protectionist measures such as
onshoring, nearshoring, and friend-shoring," Yi said.
U.S. Treasury Secretary Janet Yellen has recently encouraged
"friend-shoring," or the diversification of supply chains away
from China to market-oriented democracies such as India.
Group of Seven (G7) finance leaders on Wednesday pledged to
support low- and middle-income countries playing bigger roles in
supply chains, a move that would allow advanced economies to
whittle down their reliance on China for strategic goods.
The fragmentation of global trade has drawn warnings from
international institutions including the IMF.
IMF Managing Director Kristalina Georgieva has warned
policymakers of the danger of a new Cold War as they ramp up
efforts to secure their industrial supply chains amid
geopolitical tensions between major powers.
On the IMF's quota reform, Yi also called for quota increases
that "reflect the relative share of members in the global
economy" and strengthen the voice and representation of emerging
market and developing economies.
(Reporting by Leika Kihara; Editing by Andrea Ricci)
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