Biden sees shift in ties with China 'shortly'

HIROSHIMA, Japan, May 21 (Reuters) - U.S. President Joe Biden on Sunday said the Group of Seven nations had agreed a united approach to China that called for diversifying supply chains to reduce dependence on one country, and hinted that he could speak with China's president soon.

"We're not looking to decouple from China. We're looking to de-risk and diversify our relationship with China," Biden told a press conference after a three-day summit with G7 leaders. He said G7 nations were more unified than ever in terms of "resisting economic coercion together and countering harmful practices that hurt our workers."

G7 leaders outlined a shared approach to "de-risk, not decouple" economic engagement with China in a Saturday communique, prompting China's embassy in Japan to urged the G7 to stop creating confrontation and division.

Despite the reaction, Biden said he expected a thaw in frosty relations with China "very shortly" after strains caused by an incident earlier this year when the United States shot down a Chinese balloon that flew over sensitive military sites.

"We should have an open hotline," Biden said. He said he had agreed with Chinese President Xi Jinping during a G20 summit in Bali, Indonesia last year to keep communications open, but everything changed after "this silly balloon that was carrying two freight cars worth of spying equipment."

Biden suggested a shift in U.S.-China relations could occur soon, echoing his comment to reporters before his departure.

"In terms of talking with them, I think you're going to see that thaw very shortly," Biden said.

On the issue of tensions between China and Taiwan, Biden said there was a clear understanding among most of the allies that if China were to act unilaterally against the self-governed island Taiwan, there would be a response.

"We're not going to tell China what they can do," he said, "But in the meantime we're going to put Taiwan in a position where they can defend themselves."

Taiwan's President Tsai Ing-wen vowed on Saturday to maintain the status quo of peace and stability across the Taiwan Strait amid high tensions with China, which has stepped up military pressure on the democratically governed island.

Biden reiterated that the United States and G7 allies would not trade in materials that would allow China to build weapons of mass destruction, but insisted that was "not a hostile act."

He said he would not considering easing restrictions on China on those materials, but it was under negotiation whether to ease sanctions on Chinese General Li Shangfu, who was named in March as China's new defense minister.

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