On May 21 leaders of the world’s most wealthy democracies completed the G7 summit in Hiroshima while welcoming surprise guest Ukrainian President Volodymyr Zelensky.
Vladimir Putin’s war of aggression in Ukraine and Xi Jinping’s economic coercion practices were the primary topics discussed at the meeting. While divisions remain on ways to push back against China’s tactics, the G7 demonstrated alignment on a tough Russia policy and firm backing of Ukraine.
Concerning Ukraine, the G7 member countries were united in terms of providing Zelensky with additional aid and implementing measures that punish Russia.
President Biden unveiled a new $375 million military aid package to Ukraine which included training, artillery, armored vehicles and ammunition. Also announced was Washington’s support for training Ukrainian pilots to operate fourth-generation fighter aircraft (most notably, F-16s) and over 300 new sanctions targeting individuals, entities, vessels, aircraft and other goods which facilitate Russia’s war financing.
The United Kingdom levied a ban on the imports of Russian copper, diamonds, aluminum and nickel, and the G7 issued a joint statement specifying the need to crack down on countries that are being used by Moscow to evade international sanctions.
The Hiroshima summit also saw an effort to outreach to developing countries such as India and Brazil which have ramped up their purchases of discounted Russian oil and commodities over the past year, transactions which have helped finance Russia’s war machine.
Both Indian Prime Minister Narendra Modi and Brazilian President Luiz Inácio Lula da Silva attended the summit and were heavily courted, an acknowledgement by the West that G7 sanctions alone are not enough to sufficiently damage Putin’s ability to wage aggression in Ukraine.
Yet, the attendance of Modi, Lula and others from the Global South (including Indonesia President Joko Widodo) was noteworthy as it demonstrated the West’s plans to work with these states to create new supply chains and lessen their dependance on China.
For its part, Beijing responded saying that the G7’s description was a “smear and attack” on China, accusing the United States as being “the real coercer that politicizes and weaponizes economic and trade relations.”
However, the G7 lacked consensus on how to protect themselves from China’s practice of using its powerful economy to exert pressure on countries and entities that are critical of Beijing and which oppose “core interests” of the Chinese Community Party.
While Washington wants to take a more forward leaning approach that sharply reduces investment in China, other G7 member countries are unable to adopt such measures since China is their largest trading partner.
For perspective, to date eighteen countries and over 123 companies have been on the receiving end of China’s economic pressure campaigns. Some of the more high-profile cases over the years have included:
•China blocking exports of rare earth elements to Japan after a 2010 fishing incident in disputed waters.
•China-based South Korean businesses facing economic retaliation and boycotts after Seoul installed U.S.-made Terminal High Altitude Area Defense (THAAD) anti-missile defense systems in 2017.
•Beijing levying sanctions on $20 billion of trade with Australia after former Prime Minister Scott Morrison called for an independent investigation into the origins of COVID-19.
•H&M and Nike facing backlash and calls for boycotts in 2021 after both companies expressed concern about the use of Uyghur forced labor with cotton production.
In effect, Xi’s bullying behavior has brought together the world’s wealthiest democracies to find ways of aligning policies for protecting their economies and livelihoods.
One of the challenges facing the G7 in Hiroshima was how to defend against coercive economic measures without triggering Beijing’s ire all while enjoying the riches of its vast market?
Past discussions have involved the idea of “de-coupling” economic ties with China, yet this approach has severe limits due to the interdependence of these economies with China. Severing commercial relations is not only impractical – – U.S.-China trade hit an all-time high of $690.6 billion in 2022, according to the U.S. Bureau of Economic Analysis – – but would also likely have catastrophic consequences for all nations.
While developing a unified approach to China presented obstacles due to conflicting interests, the Hiroshima G7 summit focused on working together to “de-risk” their economies from China. The idea is to maintain economic relations with China while diversifying options for supply chains and withdrawing investment in technologies that would significantly advance Beijing’s military capabilities.
Part of this involves securing trusted suppliers of important items and technologies such as semiconductors, submarine cables, minerals, satellite networks, batteries and cloud infrastructure.
An important aspect of de-risking will be to coordinate efforts among partners to demonstrate to Beijing that attempts to drive a wedge between G7 member countries will not be successful.
There are signs, however, that the shift from “decoupling” to “de-risking” is also an attempt to strike a balance of taking a firm stand against China’s coercion while signaling that Washington is ready to engage in dialogue.
Along these lines, during the summit President Biden expressed optimism for a “thaw” in relations. On May 24, China’s new ambassador to the U.S., former vice foreign minister Xie Feng, arrived in New York to begin his new position, a development which some analysts think may be a sign of Beijing’s willingness to improve communications with Washington.
The G7 summit was important in another respect. Going forward, President Biden will be increasingly constrained politically as he grapples with sagging poll numbers, policy disputes with Congress and 2024 re-election headwinds. Amid this reality, the summit’s significant work towards building solidarity to support Ukraine and defend against China’s economic bullying will help to make progress on these twin challenges while the president has his hands full at home.