G7 Emphasizes ‘De-risking’ China Links as Priority
As the G7 summit in Hiroshima approached, the United States, European Union, and Japan took a cautious stance and formed a collective policy regarding China that rejects the idea of completely severing trade ties between these advanced nations and the largest economy in Asia.
However, the G7 faces a significant challenge in finding the optimal equilibrium between national security and economic interests, a matter that is expected to carry substantial importance throughout the summit. Moreover, the meeting will also witness the participation of leaders from developing nations such as India, Indonesia, Vietnam, Brazil, and the Comoros, an island-nation located in the Indian Ocean.
According to Japan’s foreign minister, Yoshimasa Hayashi, in a written interview with the Financial Times, Japan’s approach is not to completely detach from China but to carefully identify areas suitable for collaboration and areas that present potential risks. Hayashi stated that the Japanese government will persist in promoting cooperation in the economic sphere in a way that benefits Japan’s overall national interest.
The strategy known as de-risking, which was initially proposed by European Commission president Ursula von der Leyen in March, involves the development of defensive measures for sectors like quantum computing and artificial intelligence. This approach has been embraced by UK and Japanese officials who have begun using the same terminology, while the US is emphasizing its China policy’s focus on reducing risks.
During the summit, apart from addressing Beijing’s military ambitions and the potential conflict regarding Taiwan, Prime Minister Fumio Kishida’s objective is to demonstrate the unity of the G7 in dealing with economic security matters in general. One crucial aspect of this initiative is to find ways for member nations to collectively discourage other countries, particularly China, from employing economic coercion to manipulate individual governments into making political concessions.
According to Ryo Sahashi, an associate professor of international politics at the University of Tokyo, while the G7 countries do not share a uniformly strict stance towards China, they do find common ground in identifying areas where they need to safeguard their interests from China. The latest addition to this discussion is determining the appropriate response to economic coercion.
Sahashi believes that reaching a consensus on new economic security measures like export controls or an anti-coercion instrument is unlikely at the Hiroshima summit. However, he emphasizes the significance of sustaining the momentum for collaborative efforts among the US, EU, and Japan in safeguarding critical technologies, intellectual property, and supply chains.
Each country has adopted distinct approaches influenced by their reliance on the Chinese economy. The US has pursued an assertive strategy, while Europe and Japan have been more cautious due to their deep ties and intricate supply chains with China. Japan, in particular, fears retaliation, having experienced past disruptions and arrests. China criticizes the G7’s focus on economic coercion, claiming victimization by the US. Nobukatsu Kanehara suggests that China understands Europe’s prioritization of economic interests, potentially leading to China exploiting its economic strength to divide Europe.
According to the explanation provided, Japan is geographically close to Taiwan, making them believe that decoupling from cutting-edge semiconductor technology is unavoidable, but they still need to strike a balance as complete decoupling is impractical.
The US has implemented comprehensive export controls to hinder Chinese companies’ development of military-oriented advanced technologies. It is now seeking support from allies to establish an outbound investment screening mechanism primarily targeting China.
Brussels is also considering the creation of its own mechanism to assess overseas investments by EU companies in specific sensitive technologies that could enhance rival nations’ military capabilities. However, officials are unlikely to agree on a joint mechanism with the US.
Meanwhile, Japan has introduced restrictions on the export of 23 types of technology, following an agreement reached with the US and the Netherlands in March. However, these measures in both Europe and Japan are not specifically aimed at any particular country.
Rahm Emanuel, the US ambassador to Tokyo, argues that addressing Beijing’s economic coercion requires a collective response led by the United States. Nevertheless, Tokyo prefers to resolve disputes through the World Trade Organization.
Kazuto Suzuki, a professor at the University of Tokyo, notes the challenge of economic security, where countries are both collaborators and competitors. If US companies suffer, it could present opportunities for Germany, France, and Japan. Consequently, reaching a consensus on the extent of utilizing export controls against China will be difficult due to varying perspectives among the US, EU, and Japan.