Aurelia Butler

NIIGATA, Japan (Reuters) -Treasury Secretary Janet Yellen on Saturday called a showdown over raising the U.S. debt ceiling “more difficult” than in the past but said she remained hopeful a solution could be found to avert a first ever U.S. defaultYellen told Reuters in an interview on the sidelines of a meeting of Group of Seven finance officials in Japan that she hoped to update the U.S. Congress within the next couple of weeks about when exactly Treasury would run out of funds to pay the government’s bills.The U.S. Treasury chief has called repeatedly for Congress to agree to raise the $31.4 trillion cap on federal borrowing to avert the “economic and financial catastrophe” that would ensue if the United States defaulted on its debts.British finance minister Jeremy Hunt told reporters the standoff posed a “very serious” threat to the global economy.”It would be absolutely devastating if America… was to have its GDP knocked off track by not reaching agreement,” Hunt said on the sidelines of the G7 meetings.Yellen said her estimate last week that the Treasury may not be able to meet payment obligations as early as June 1 was consistent with Friday’s report from the Congressional Budget Office warning of a “significant risk” of default in the first two weeks of June.President Joe Biden, a Democrat, insists Congress has a constitutional duty to raise the limit without conditions to fund previously approved spending. Republicans, who control the House of Representatives, want Biden to agree to sweeping budget cuts to secure their agreement.Unlike most developed countries, the U.S. sets a ceiling on how much it can borrow. Because the government spends more than it takes in, lawmakers must periodically raise that cap.POLARISATIONYellen said the first major standoff over the debt ceiling since 2011 reflected continuing U.S. polarisation after the presidency of Donald Trump. “It’s certainly not a positive for relationships and standing in the world and credibility,” she said. “Maybe this time is more difficult, but I’m hopeful that…we will find a solution.”She said it was a positive sign that “pretty much everyone” at a meeting Biden hosted with congressional leaders on Tuesday agreed it would be unacceptable for the U.S. to default. Biden, who is expected to reconvene the group early next week, still viewed attending the G7 summit starting on Friday in Hiroshima as a priority, Yellen said, although she noted that he had said he could cancel the trip if there was not sufficient progress on ending the impasse.Despite the debt ceiling fight, Yellen said she remained convinced that the Biden administration had re-established U.S. leadership in the world and other G7 leaders were grateful they had turned “the dial 180 degrees relative to the Trump administration”.She argued there were no good options for prioritising payments in the event of a default, but conceded it would be technically possible to process them one day at a time as revenue came in, resulting in a sort of rolling default. Principal and interest payments are handled separately. In a report this week, the Bipartisan Policy Center said some Treasury officials had viewed the approach as the most plausible and least harmful during the 2011 standoff.”We shouldn’t be talking about that,” Yellen said. “We should be talking about raising the debt ceiling. Every plan has serious downsides.” More

BEIJING (Reuters) -Australia’s Minister for Trade and Tourism Don Farrell said on Friday he was “pleased” with his talks with his Chinese counterpart in Beijing on removing trade barriers, but added that his visit was “just another step” in stabilising ties.Farrell’s visit to the Chinese capital, the first by an Australian trade minister since 2019, followed an easing of diplomatic tensions with the election of a Labor government in mid-2022.Australian wine, beef, barley, coal, seafood and timber exports to China were hit by trade curbs in 2020, and Australian journalist Cheng Lei was detained in Beijing on national security charges, after Australia called for an international inquiry into the origins of COVID-19, which angered Beijing.The visit “is just another step in the road of stabilising the relationship,” Farrell told a press conference after the talks. “I came here to create a pathway to normalise our trade and economic relationship with China.”China’s Commerce Minister Wang Wentao told Farrell the economies of China and Australia were highly complementary and that the two countries should focus on the long-term development of their economic and trade relations, China’s commerce ministry said in a statement on Saturday. China is willing to work with Australia to expand their areas of cooperation and hopes Australia will treat Chinese companies and products fairly and justly, the ministry said. As tensions eased, Beijing in January gave permission to four government-backed firms to ship in Australian coal and trade has now fully resumed.Australia agreed in April to suspend a case at the World Trade Organization over China’s anti-dumping duties on barley, while China said it would hasten a review into the tariffs.But Canberra is still pushing to have other trade curbs removed and for diplomatic relations to stabilise. In opening remarks at the 16th Joint Ministerial Economic Commission, Farrell told Wang: “We can see the benefits for Australian and Chinese businesses and consumers that continue to flow from the China-Australia Free Trade Agreement” of 2015.”I’m very pleased to confirm that we agreed to step up dialogue under our free trade agreement and other platforms to resolve our outstanding issues,” Farrell said after his meeting with Wang.”We also discussed the World Trade Organization disputes. I was very pleased to get reassurances that our agreement reached recently on barley remains on track.”Farrell said Wang had accepted an invitation to visit Australia.”There were very positive discussions, as I said, a whole lot of movement has started already. We’ve seen coal come back to China, we’ve seen copper concentrates come back to China, we’ve seen cotton come back into China.”Farrell said he raised the consular cases of Cheng Lei and detained Australian blogger Yang Hengjun with Wang. The Australian minister said China also expressed a desire to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a free trade agreement among some countries on the Pacific Rim. “The Chinese minister indicated that they would like to be considered for accession to the CPTPP,” Farrell said. Entry into CPTPP requires the approval of all member countries, including Australia. More

NIIGATA, Japan (Reuters) – British finance minister Jeremy Hunt said on Saturday it would be “absolutely devastating” if the United States failed to reach agreement to raise its debt ceiling and had its gross domestic product “knocked off track”.Hunt told reporters that Group of Seven (G7) finance chiefs in Japan had “very frank and open discussions” about the challenges they face, including banking regulation and the impact of Russia’s war in Ukraine on the global economy.A standoff between President Joe Biden and the Republican-controlled House of Representatives, which has raised the prospect of a first-ever U.S. debt default, posed a “very serious threat to the global economy,” Hunt said.”It would be absolutely devastating if America, which is one of the biggest motors of the global economy, was to have its GDP knocked off track by not reaching agreement,” he said. He said he hoped that Biden and Congress would be able to resolve their differences.Hunt said G7 officials also discussed the impact of Western sanctions on Russia over its invasion of Ukraine, and talked at length about the need to stop sanctions evasion, or leakage.He said it was clear that economic sanctions on the Russian economy had not been as effective as military support for Kyiv, but were generating more of “a slow burn” and there would be a point when Western pressure “starts to bite”.Hunt said it was very important that non-G7 members invited to the meeting by Japan – India, Indonesia, Brazil, Singapore and Comoros – took part in the discussion about Russia.One key area of agreement was that G7 rich countries want to “de-risk” relations with China, rather than to decouple from all trade, Hunt said, noting that Britain’s “strong view” was the need to avoid an approach that inadvertently returned the world to “protectionism”.”No one’s talking about not trading with China, not exporting to China, not importing from China, but we do need to make sure that we don’t have dependencies that can make us vulnerable,” he said, adding that the difficult part was working out the concrete steps needed to accomplish that.G7 members also agreed that any country that engages in economic coercion should expect a united response from advanced democracies, but gave no details on what that would entail.Hunt, who spoke before meeting U.S. Treasury Secretary Janet Yellen, said one disappointing thing had been the inability of G7 members to convince more developing countries – or the Global South – to support the West’s unified response to Russia’s invasion, and more soul-searching was needed on that front. More

NIIGATA, Japan (Reuters) -Finance leaders of the Group of Seven (G7) nations warned on Saturday of mounting economic uncertainty, in a subdued end to a three-day meeting overshadowed by concerns about the U.S. debt stalemate and fallout from Russia’s invasion of Ukraine.The gathering in the Japanese city of Niigata came as global policymakers – already preoccupied by U.S. bank failures and efforts to reduce reliance on China – are now forced to grapple with a potential default by the world’s largest economy.While the communique made no mention of the U.S. debt ceiling stalemate, it figured constantly in discussions.The standoff has hit markets as borrowing costs have risen on aggressive monetary tightening by U.S. and European central banks.”The global economy has shown resilience against multiple shocks, including the COVID-19 pandemic, Russia’s war of aggression against Ukraine, and associated inflationary pressures,” the finance ministers and central bankers said.”We need to remain vigilant and stay agile and flexible in our macroeconomic policy amid heightened uncertainty about the global economic outlook,” they added in the communique after the meeting.U.S. Treasury Secretary Janet Yellen, who has said a first-ever U.S. default could occur within weeks if the impasse is not resolved, told Reuters on Saturday the standoff was “more difficult” than in the past but remained hopeful of a solution.Britain’s finance minister, Jeremy Hunt, gave a sobering assessment, saying it would be “absolutely devastating” if the United States failed to reach agreement to raise the federal borrowing limit and had its economic growth “knocked off track”.G7 central bank chiefs vowed to combat “elevated” inflation and ensure expectations on future price moves remained well-anchored, a sign many of them will not let their guard down against stubbornly high inflation.The debt ceiling showdown was discussed at a dinner on Thursday night, Japanese Finance Minister Shunichi Suzuki told a press conference after the meeting. He declined to elaborate.CHINA AND SUPPLY CHAINSSeeking to reassure investors after recent U.S. bank failures, the G7 finance chiefs retained an April assessment that the global financial system was “resilient”.But they pledged in the communique to tackle “data, supervisory, and regulatory gaps in the banking system”.China, although not a member of the G7, was a focus. Japan has spearheaded efforts to diversify supply chains and reduce the G7’s heavy reliance on the world’s second-biggest economy.In the communique, the finance leaders set a year-end deadline for launching a new scheme to diversify global supply chains.That envisages the G7 offering aid to low- and middle-income countries to secure them a bigger role in supply chains for energy-related products.”Diversification of supply chains can contribute to safeguarding energy security and help us to maintain macroeconomic stability,” the communique added.It did not mention an idea, flagged by the United States, to consider targeted restrictions on investments to China to combat Beijing’s use of “economic coercion” against other countries.But it said G7 countries would work to ensure foreign investment in critical infrastructure did not “undermine the economic sovereignty of host countries”.INFLECTION POINTMany central banks face an inflection point, with aggressive interest rate hikes beginning to cool growth and unsettling the banking system.Bank of Japan Governor Kazuo Ueda, who chaired the meeting’s discussion on monetary policy, said most central banks appeared to feel the impact of past interest rate hikes had yet to show fully as they look to guide future monetary policy.”Many said they wanted to guide monetary policy taking that point in mind,” he said at the press conference with Suzuki.The group reiterated its condemnation of Russia’s invasion of Ukraine and pledge to strengthen monitoring of cross-border transactions between Russia and other countries.The discussions will lay the groundwork for the G7 summit starting on Friday in Hiroshima, where concern about China’s use of “economic coercion” in its dealings abroad will figure.U.S. President Joe Biden had planned to attend the Hiroshima summit, Yellen said, but added he has said he could cancel the trip if progress on the debt impasse was insufficient. More