(From left) Charles Michel, Giorgia Meloni, Justin Trudeau, Emmanuel Macron, Fumio Kishida, Joe Biden, Olaf Scholz, Rishi Sunak and Ursula von der Leyen pose for a family photo before their working lunch meeting on economic security in Hiroshima. AFP

The initiative, dubbed Coordination Platform on Economic Coercion, will use early warning and rapid information sharing on economic coercion with members meeting regularly for consultations, the leaders said in a statement.

Leaders from the Group of Seven (G7) nations will outline steps on Saturday aimed at reducing risks from China while preserving economic ties, a day after they agreed to ramp up sanctions against Russia over its invasion of Ukraine.

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The heads of government of the world's richest democracies are grappling with the challenges posed by China and Russia at a three-day summit in the deeply symbolic Japanese city of Hiroshima.

In a draft of the final communique seen by Reuters, G7 leaders agreed that China's status as the world's second-largest economy meant they had to continue to cooperate.

"We do not seek to thwart China's economic progress and development," the leaders said in the draft, which is subject to change.

China has voiced concern that the summit would turn into a "political show" against Beijing. China's embassy in Tokyo issued a statement on the eve of the summit expressing grave concerns about recent signs of "negative" China-related moves at the G7 meeting.

Reuters