G7 Nations United: Confronting China’s Economic Coercion

The recent G7 summit held in Hiroshima not only aimed to send a strong message to Russia but also highlighted concerns about China. British Prime Minister Rishi Sunak, among others, stated that China presented the “greatest challenge of our age” in terms of global security and prosperity, noting its increasing authoritarianism both at home and abroad.

In their statements, the leaders of the world’s wealthiest democracies made their stance on contentious issues such as the Indo-Pacific and Taiwan clear to Beijing. However, the focal point of their message revolved around what they referred to as “economic coercion.”

For the G7 nations, this poses a delicate balancing act. Their economies have become deeply intertwined with China through trade, but the competition with Beijing has intensified, and they disagree on numerous issues, including human rights.

Yet, the G7 leaders worry that they are being held hostage. In recent years, Beijing has not hesitated to impose trade sanctions on countries that have displeased them. South Korea experienced this when Seoul installed a US missile defense system, and Australia faced similar repercussions during a period of strained relations.

The European Union was particularly alarmed when China blocked Lithuanian exports after the Baltic country allowed Taiwan to establish a de facto embassy. It is, therefore, unsurprising that the G7 would condemn what they perceive as a “disturbing rise” in the “weaponization of economic vulnerabilities.”

The G7 leaders called for “de-risking,” a policy championed by European Commission President Ursula von der Leyen. This approach represents a more moderate version of the US concept of “decoupling” from China. It entails adopting a tougher diplomatic stance, diversifying trade sources, and safeguarding trade and technology.

Furthermore, they launched a “coordination platform” to counter economic coercion and collaborate with emerging economies. Although the specifics of this platform remain vague, it is likely to involve countries assisting one another by increasing trade or providing funding to overcome any barriers imposed by China.

The G7 also intends to strengthen supply chains for crucial goods like minerals and semiconductors while bolstering digital infrastructure to prevent hacking and technology theft.

Their most significant measure, however, is multilateral export controls. This entails working together to ensure that their technologies, especially those used in military and intelligence sectors, do not end up in the hands of “malicious actors.” The US has already implemented such controls by banning the export of chips and chip technology to China, a move joined by Japan and the Netherlands. The G7 made it clear that these efforts would not only continue but intensify, despite Beijing’s protests.

Additionally, they expressed their commitment to cracking down on “inappropriate transfers” of technology facilitated through research activities. Many countries, including the US, have expressed concerns about industrial espionage and have prosecuted individuals accused of stealing tech secrets for China.

Simultaneously, the G7 leaders were careful not to sever ties with China. Much of their language regarding economic coercion did not explicitly name China, seemingly attempting to avoid directly pointing a finger at Beijing.

When discussing China, they took a nuanced approach while standing their ground. They sought to appease Beijing by asserting that their policies were not designed to harm China, nor were they seeking to impede its economic progress and development. They clarified that they were not pursuing decoupling or turning inward. However, they also exerted pressure on China to cooperate, emphasizing that a “growing China that plays by international rules would be of global interest.”

They also advocated for “candid” engagement, indicating their willingness to maintain open lines of communication despite the tense atmosphere, allowing them to express their concerns directly to China.

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