G7 sees double, feeling force of emerging economies

By Paul Carrel

ESSEN, Germany (Reuters) - China joined the Group of Seven nations for talks on the global economy on Saturday, marking an effective expansion of the club which may also admit other emerging economic powerhouses to almost double its size.

German Finance Minister Peer Steinbrueck, chairing the meeting of G7 finance officials in Essen, Germany, believes the world's traditional economic giants can no longer hold effective talks on the global economy without other countries.

The G7 encompasses Germany, the United States, Japan, Britain, France, Italy and Canada. Russia joins the group to form the G8 -- usually to discuss political issues. Steinbrueck said on Friday that Russia should play a full part in G7 talks.

"It does not make sense to have the Russian Federation not as a full member at the table," he told a news conference.

"There are a lot of topics that cannot be discussed without the important emerging market countries like China, India, South Africa, Australia, to name a few," he said. "I think that one should have them at the table."

"It's not a formalized process, but in my opinion, this G7-G8 meeting will be expanded to include this circle, and in the sense of full membership," Steinbrueck added.

However, there was no mention of expanding the group in the statement issued after Saturday's meeting, and Steinbrueck did not revisit the issue at the final news conference.

Calls for the G7/G8 to be reshaped have been building since the turn of the century as economic clout has seeped toward emerging powers such as China -- which has leapfrogged Britain to become the world's fourth-largest economy -- and India.

On Friday, representatives of five so-called "outreach" countries -- Brazil, China, India, Mexico and South Africa -- joined G7 finance ministers for a working dinner.

G8 nations account for some 44 percent of global gross domestic product (GDP) but less than 14 percent of the world's population. A G8-plus-five would account for around 70 percent of world GDP and 56 percent of humanity.

MIXED FEELINGS

German Chancellor Angela Merkel last year dismissed suggestions the G8 should expand to include new members. Last month she vowed to forge "new forms of dialogue" with countries like Brazil, China and India.

British Prime Minister Tony Blair has backed G8 expansion.

In May last year, Blair described a "hopeless mismatch" between global challenges and institutions and called for reform of the United Nations, International Monetary Fund, World Bank and the G8 -- centering on a formal G8-plus-five format.

Expanding the club does not appear to be popular with all its members.