(Drops repeat of Hua's name in paragraph 16)
* G7 says 'global growth is our urgent priority'
* Abe says group has 'strong sense of crisis'
* China slams G7 on statement on South China Sea
* G7 says 'Brexit' would hurt global growth
By Tetsushi Kajimoto
ISE-SHIMA, Japan, May 27 (Reuters) - The Group of Seven
industrial powers pledged on Friday to seek strong global
growth, while papering over differences on currencies and
stimulus policies and expressing concern over North Korea,
Russia and maritime disputes involving China.
G7 leaders wrapped up a summit in central Japan vowing to
use "all policy tools" to boost demand and ease supply
constraints.
"Global growth remains moderate and below potential, while
risks of weak growth persist," they said in a declaration.
"Global growth is our urgent priority."
Japanese Prime Minister Shinzo Abe, talking up what he calls
parallels to the global financial crisis that followed the 2008
Lehman Brothers bankruptcy, said the G7 "shares a strong sense
of crisis" about the global outlook.
"The most worrisome risk is a contraction of the global
economy," led by a slowdown in emerging economies, Abe told a
news conference after chairing the two-day summit. "There is a
risk of the global economy falling into crisis if appropriate
policy responses are not made."
In the broad-ranging, 32-page declaration, the G7 committed
to market-based exchange rates and to avoiding "competitive
devaluation" of their currencies, while warning against wild
exchange-rate moves.
This represents a compromise between the positions of Japan,
which has threatened to intervene to block sharp yen rises, and
the United States, which generally opposes market intervention.
The G7 vowed "a more forceful and balanced policy mix" to
"achieve a strong, sustainable and balanced growth pattern",
taking each country's circumstances into account, while
continuing efforts to put public debt on a sustainable path.
Abe has stressed the need for flexible fiscal policy to
sustain economic recovery, while German Chancellor Angela Merkel
has been sceptical about public spending to boost growth.
The G7 called global industrial overcapacity, especially in
steel, a "pressing structural challenge with global
implications".
NORTH KOREA, 'BREXIT' WORRIES
The G7 demanded that North Korea fully comply with U.N.
Security Council resolutions and halt nuclear tests, missile
launches and other "provocative actions".
The group condemned Russia's "illegal annexation" of the
Crimean peninsula from Ukraine. The declaration threatened
"further restrictive measures" to raise the costs on Moscow but
said sanctions could be rolled back if Russia implemented
previous agreements and respected Ukraine's sovereignty.
The G7 also expressed concern over the East and South China
Seas, where China has been taking more assertive action amid
territorial disputes with Japan and several Southeast Asian
nations.
Without mentioning Beijing, the G7 reiterated its commitment
to the peaceful settlement of maritime disputes and to
respecting the freedom of navigation and overflight. The group
called for countries to refrain from "unilateral actions which
could increase tensions" and "to settle disputes by peaceful
means".
China was not pleased with the G7 stance.
"This G7 summit organised by Japan's hyping up of the South
China Sea issue and exaggeration of tensions is not beneficial
to stability in the South China Sea and does accord with the
G7's position as a platform for managing the economies of
developed nations," Foreign Ministry spokeswoman Hua Chunying
said in Beijing. "China is extremely dissatisfied with what
Japan and the G7 have done."
The G7 also called large-scale immigration and migration a
major challenge and vowed to increase global aid for the
immediate and long-term needs of refugees and displaced people.
Referring to Britain's referendum next month on whether to
leave the European Union, the G7 said an exit "would be a
serious risk to global growth".
The leaders pledged to tackle a global glut in steel, though
their statement did not single out China, which produces half of
the world's steel and is blamed by many countries for flooding
markets with cheap steel.
On climate change, the G7 said they aim to put into effect
by the end of the year the Paris climate agreement, in which
almost 200 nations agreed a sweeping plan to end global
dependence on fossil fuels to limit rising temperatures.
The G7 comprises Britain, Canada, France, Germany, Italy,
Japan and the United States.