G7 leaders discuss more steps to level China playing field, US official says

Italy hosts G7 summit in Puglia

BORGO EGNAZIA, Italy (Reuters) - Group of Seven (G7) leaders are discussing additional steps to level the playing field in trade with China and protect their economic security, a senior U.S. official said on Friday.

The official said Washington expected to see unprecedented unity across the G7 in confronting China’s non-market policies and practices.

"For too long, the [People's Republic of China] has been playing by a different set of rules, with unfair and anti-competitive economic practices," the official said.

Washington says China’s policies and subsidies are creating global spillovers and harmful overcapacity that undercuts firms elsewhere and leads to supply chain dependencies in sectors such as solar, wind, electric vehicles, lithium-ion batteries, medical devices, mature-node semiconductors, steel and others.

The official said the United States and its G7 partners - Britain, Canada, Germany, France, Italy and Japan, along with the European Union - were investing in building diversified supply chains and creating more resilient economies.

The U.S. and the European Union have already increased tariffs on certain sectors, including electric vehicles. It was not immediately clear what further action the G7 leaders were considering.

"China’s practices are impacting our partners around the world, from advanced economies to developing countries and emerging markets," the official said. "That’s why we expect to see unprecedented unity across the G7 in calling out harmful practices and committing to work together in response."

The official added that Washington was not trying to constrain China's economic development, but would insist on fair competition and defend U.S. workers from unfair Chinese practices.

(Reporting by Andrea Shalal; Editing by Tomasz Janowski and Kevin Liffey)