Tokyo, Japan – The G7 countries all agree on the threat of economic coercion from China.
But reaching a consensus on concrete measures to counter Beijing promises to be a challenge for the club of wealthy democracies amid divisions over how to manage ties to the world’s second-largest economy.
The leaders of the G7 – Canada, France, Germany, Italy, Japan, the United Kingdom and the United States – have signaled that China’s use of punitive trade measures will be high on the agenda of their three-day annual summit, which kicks off in Hiroshima, Japan, on Friday. The leaders of the European Union will also be present.
China’s use of coercive economic measures has been a growing concern in Asia Pacific and Europe in recent years, with Japan, South Korea, Australia and Lithuania all facing trade restrictions following disputes with Beijing over issues ranging from the origin of the COVID-19 pandemic to Taiwan.
While the G7 is expected to issue a statement expressing concern about China’s economic constraints and suggesting ways to work together on the issue, it is unclear how far Japan and European members are willing to go with action which may antagonize Beijing, given their heavy dependence on Chinese trade.
Japan and the European Union both consider China their most important trading partner. The United States, which has led global efforts to push back Beijing, does most of its trade with Canada and Mexico, with China the third-largest partner.
Sayuri Shirai, an economics professor at Keio University in Tokyo, said Japan and Europe may be more cautious than the US regarding actions that could disrupt trade relations with China.
“China’s GDP [gross domestic product] will surpass the US in the next decade and have a huge market… So having access to the Chinese market is important for advanced economies,” Shirai told Al Jazeera.
“Japan has a military alliance with the US, so they may be closer to the US, but they may also have to be careful about their companies’ interest in China, as many companies have made a lot of foreign direct investment in China,” Shirai added. up to it. .
‘Economic NATO’
Some of the loudest calls for coordinated action against China come from the US, where President Joe Biden has made fighting 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 respond to economic coercion, military aggression and violations of sovereignty.
Former British Prime Minister Liz Truss also raised the idea of an economic version of NATO in a speech in February in which she called on world leaders to stand ready to impose coordinated sanctions on China if it takes aggressive steps towards of self-governed Taiwan, which Beijing claims as its territory.
In March, the EU unveiled an “anti-coercive tool” for member states that includes a new dispute settlement mechanism and countermeasures such as customs duties and restrictions on public procurement.
China has rejected allegations that it uses trade as a weapon and accused the US of hypocrisy over its own use of sanctions and export controls.
“If the G7 summit puts ‘countering economic coercion’ on the agenda, I suggest they first discuss what the US has done,” said Wang Wenbin, spokesman for China’s foreign ministry, at a regular meeting last week. press conference.
“China itself is a victim of economic coercion by the US and we have always strongly opposed economic coercion by other countries.”
Enforcement is key
The divisions between the US and other G7 members over China are not the only disagreements that have emerged in the run-up to this weekend’s summit.
Last month, the Financial Times reported that Japan and the EU had objected to a US proposal for a G7-wide ban on virtually all exports to Russia, saying it would be unrealistic.
Yet US officials have tried to raise expectations that the G7’s stance on economic coercion will go far beyond rhetoric.
On Tuesday, U.S. Ambassador to Japan Rahm Emanuel, who labeled World Trade Organization dispute settlement as slow and called on the U.S. to lead class action against Chinese coercion, told his social media followers to “expect action.”
“G7 members are developing the tools to deter and defend China’s economic intimidation and retaliation,” Emanuel said on Twitter.
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 toward concerted action because of a growing awareness of the dangers of over-reliance on economic a particular country.
“Europe has witnessed the impact of coercion within its ranks more vividly than the US, most recently in Lithuania, and endured the pain of over-dependence on a single supplier as it weaned itself off reliance on Russian energy” Kennedy told Al Jazeera.
“A focus on risk reduction by diversifying the supply chain… building partnerships with low- and middle-income countries through investment and aid is deeply unifying. It can also be presented to the Global South as a location for alternative supply.”
However, Henry Gao, a Chinese trade expert at Singapore Management University, said the actual implementation of coordinated measures is likely to be difficult.
“It’s easy to come up with explanations, but enforcement will become a big problem, especially for Asian countries that have very close economic ties with China,” Gao told Al Jazeera.
“A model that could be useful in this regard is the EU anti-coercion instrument, which moves decision-making from the country level to the EU level, but this would be very difficult to replicate even at the G7 level , not to mention on a global scale.”