Leaders of the Group of Seven vowed on Friday to tackle what they called unfair business practices by China that were undermining their workers and industries, according to a draft statement on the final day of their annual summit.

The G7 also warned of action against Chinese financial institutions that helped Russia obtain weaponry for its war against Ukraine.

The leaders of Italy, the United States, Britain, Canada, France, Germany and Japan were on Friday discussing concerns surrounding China's excess industrial capacity, that Western governments say is distorting local markets.

Pope Francis was then due to make an historic appearance at the summit in southern Italy to discuss artificial intelligence.

The draft statement, seen by Reuters, stressed the G7 was not trying to harm China or thwart its economic development but would "continue to take actions to protect our businesses from unfair practices, to level the playing field and remedy ongoing harm."

The U.S. this week imposed fresh sanctions on China-based firms supplying semiconductors to Russia amid worries over Beijing's increasingly aggressive stance against Taiwan and run-ins with the Philippines over rival maritime claims.

"China is not supplying weapons (to Russia) but the ability to produce those weapons and the technology available to do it, so it is in fact helping Russia," U.S. President Joe Biden told reporters at the summit on Thursday after signing a bilateral security pact with Ukrainian President Volodymyr Zelenskiy.

During the first day of their meeting in southern Italy, the G7 nations agreed on a deal to provide $50 billion of loans for Ukraine backed by interest from frozen Russian assets - hailing the accord as a powerful signal of Western resolve.

In the draft, G7 leaders also promised sanctions against entities that helped Russia circumvent sanctions on its oil by transporting it fraudulently.