G7 Leaders Reach Consensus on China’s “Economic Threat” But Struggle with Action

G7 countries reach consensus on China’s “economic threat”.

But finding consensus on specific actions to counter Beijing has been a challenge for the club of wealthy democracies amid disagreements over how to manage the relationship with the world’s second-largest economy.

The leaders of the Group of Seven nations – Canada, France, Germany, Italy, Japan, the United Kingdom and the United States – have said China trade measures will be high on the agenda for their annual three-day summit in Hiroshima, Japan, on Friday Opening, EU leaders will also attend the summit.

China’s economic moves have been a growing concern in the Asia-Pacific region and Europe in recent years, with Japan, South Korea, Australia and Lithuania all facing trade restrictions following disputes with Beijing over the origins of the pandemic and Taiwan, among other issues.

While the G7 is expected to issue a statement expressing concern about the economic threat from China and laying out ways to cooperate on the issue, it is unclear how far Japan and European members might be willing to go, given their heavy reliance on Chinese trade. measures that could anger Beijing.

Japan and the European Union both count China as their top trading partner, with the United States leading the global effort to push back against Beijing and doing the most trade with Canada and Mexico, with China its third-biggest partner.

Sayuri Shirai, an economics professor at Keio University in Tokyo, said Japan and Europe may be more cautious than the United States about actions that could damage trade relations with China.

Sayuri Shirai told Al Jazeera that “China’s gross domestic product will surpass that of the US in the next ten years and it has a huge market…so access to the Chinese market is important for advanced economies.”

Shirai added, “Japan has a military alliance with the U.S., so they may be closer to the U.S., but they may also have to pay attention to their companies’ interests in China, because many companies have a lot of foreign direct investment in China.”

“Economic NATO”

Some of the loudest calls for coordinated action against China have come from the United States, where President Joe Biden has made confrontation with Beijing a central pillar of his foreign policy.

Earlier this year, Bob Menendez, the Democratic chairman of the Senate Foreign Relations Committee, called for the formation of an “economic NATO” to deal with economic coercion, military aggression and violations of sovereignty.

The idea of ​​a NATO economy was also floated by former British Prime Minister Liz Truss in a speech in February in which she called for China to take aggressive action over its Taiwan region, which is an integral part of China. World leaders are ready to impose coordinated sanctions on China.

In March, the EU unveiled an “anti-coercion instrument” for member states, which includes new dispute settlement mechanisms and countermeasures such as tariffs and public procurement restrictions.

China has denied allegations that it uses trade as a weapon, and Beijing accuses the United States of hypocrisy given its own use of sanctions and export controls.

Chinese Foreign Ministry spokesman Wang Wenbin said at a regular news conference last week, “If the G7 summit is to put economic coercion on the agenda, I suggest that we first discuss what the United States is doing.”

“China itself is a victim of economic coercion by the United States, and we have always firmly opposed economic coercion by other countries.”

implementation is key

The disagreement between the U.S. and other G7 members over China is not the only one that has emerged ahead of this weekend’s summit.

The Financial Times reported last month that Japan and the European Union objected to a U.S. proposal to ban almost all exports to Russia within the G7 as impractical.

Still, U.S. officials are trying to raise expectations that the G7’s stance on economic coercion will go far beyond verbal expectations.

On Tuesday, Rahm Emanuel, the U.S. ambassador to Japan, criticized the World Trade Organization for being slow to resolve the dispute, calling on the U.S. to lead a collective effort against China’s economic actions, telling his social media followers to “expect action.”

“G7 members are developing tools to deter and defend against Chinese economic influence,” Emanuel tweeted.

Mark Kennedy, director of the Wahba Institute for Strategic Competition at the Wilson Center in Washington, D.C., said he expected the G7 to make progress in coordinated action amid growing awareness of the dangers of economic overdependence on any one country.

Mark Kennedy told Al Jazeera that “Europe has seen more vividly than the US the effects of its internal coercion, most recently in Lithuania, and endured the pain of overreliance on a single supplier as it weaned itself off Russian energy.”

“The focus on reducing risk through supply chain diversification through investment and aid in partnerships with low- and middle-income countries is very consistent and can also be showcased to developing countries around the world as alternative sourcing locations.”

However, the actual implementation of any coordinated measures could be difficult, said Henry Gao, a China trade expert at Singapore Management University.

“It’s easy to make a statement, but implementation will be a big problem, especially for Asian countries that have very close economic ties with China,” Henry Gao told Al Jazeera.

“One model that might be useful in this regard is the EU’s counter-coercion tool, which moves decision-making from the national level to the EU level, but this is difficult to replicate even at the G7 level, let alone globally.”