Nobel-winning economist Joseph Stiglitz said "hostile" US policies on China risk splitting the world into two blocs and urged the West to offer investment not "lectures" to developing countries, according to AFP on Friday.

"It would be a good idea... for the other G7 countries to try to put pressure on the United States to say, 'what you're doing is forming the world into two blocs, and that will be hard,'" the professor said on the sidelines of Group of Seven ministerial talks in Japan.

"We may be in some kind of strategic competition, but that doesn't mean that we have to be quite so hostile."

Stiglitz warned that competition between US Democrats and Republicans to look tough on China could undermine international action on climate change and other global crises.

And he argued that recent moves by Washington, which is attempting to limit Chinese influence on critical supply chains, could not be explained simply by concerns over Beijing's political system.

"We have many, quote, friends who are authoritarian, but what we don't like is the economic competition, and political competition," he said.