G7 hammers China over Russia ties, "harmful" trade

China was a key focus of the Group of Seven talks in Puglia, amid souring trade relations between Beijing and the West and concerns that its supplies of equipment to Moscow are fuelling Russia's war in Ukraine.

"We call on China to cease the transfer of dual-use materials, including weapons components and equipment, that are inputs for Russia's defence sector," the leaders said in an end-of-summit statement, France24 reports.

The Group of Seven also took aim at what it called "dangerous" incursions by China in the contested South China Sea, where worries of a military escalation between Beijing and its neighbours are rising.

"We oppose China's militarisation, and coercive and intimidation activities in the South China Sea," read the statement, using stronger language than at last year's summit in Japan.

After a first day dominated by Ukraine, US President Joe Biden and the leaders of Japan, France, Germany, Canada, Britain and host country Italy turned their focus to the world's second-largest economy, a superpower with a huge influence on geopolitics and global trade.

"G7 countries are on the same page vis-a-vis China," a Japanese government source told AFP.

Thursday's talks, attended by Ukrainian President Volodymr Zelensky, were marked by a strong show of G7 support for Kyiv, with an agreement to use profits from frozen Russian assets to provide a new $50-billion loan to Ukraine.

With the war in its third year, the G7 said the deal sent an "unmistakable signal" to Russian President Vladimir Putin that they would back Kyiv "as long as it takes".

Beijing denounced what it called "naked protectionist behaviour" and said it reserved the right to file a suit with the World Trade Organization (WTO).

The US, Japan and the EU -- which attends G7 summits as an unofficial eighth partner -- have all voiced concern over China's so-called "industrial overcapacity".

They argue generous subsidies by Beijing, particularly in green energy and technology sectors such as solar panels and electric vehicles, risk flooding the global market with cheap goods -- concerns that China dismisses.

That excess capacity threatens Western companies struggling to compete, particularly in the growing green tech sector.

"We express our concerns about China's persistent industrial targeting and comprehensive non-market policies," the G7 final statement said, citing "global spillovers, market distortions and harmful overcapacity" in multiple sectors.

The leaders also called on China to stop restricting its exports of critical minerals used in key global industries such as telecommunications and electric vehicles.