China takes swipe at Western ‘friend-shoring’ efforts

On Friday, China’s central bank governor criticized Western nations’ “friend-shoring” efforts to trade more with friends and rely less on the world’s top goods exporter, saying they might exacerbate global supply chain stress.

Western economies are prioritizing reducing their reliance on Chinese supply chains as Beijing’s threats to Taiwan increase geopolitical concerns in Asia. Pandemic trade problems have accelerated their ambition to reduce China dependence.

“The global economy is facing increasing downward pressures,” People’s Bank of China governor Yi Gang told the IMF 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.

Treasury Secretary Janet Yellen has advocated “friend-shoring,” or diversifying production chains away from China to market-oriented nations like India.

On Wednesday, Group of Seven (G7) finance leaders vowed to promote low- and middle-income nations in supply chains, allowing advanced economies to reduce their strategic goods dependence on China.

The IMF has warned about global trade fragmentation.

As policymakers work to secure their industrial supply chains amid geopolitical tensions between major countries, IMF Managing Director Kristalina Georgieva has warned of a new Cold War.

Yi also urged the IMF to enhance quotas to “reflect the relative share of members in the global economy” and strengthen emerging market and developing economies’ voices.