Why China was the elephant in the room at G7's Hiroshima summit

Each year, several summits take place across the globe championed by several groups of nations. These summits could work as a catalyst to align leaders, advance solutions to emerging problems, present strategies, and initiate partnerships.  The G7 summit took place between 0n May19-21, 2023 in Hiroshima.

Hiroshima can never be a summit destination without everyone experiencing the permanent effect of wrong decisions. This was the 49th international summit where annually, seven of the world's advanced economies meet to chart the way forward regarding economic trade and coordinate global policies whilst addressing transnational issues.

The G7 currently consists of the United States, Canada, Japan, United Kingdom, France, Germany, and Italy, plus the European Union. The forum in Hiroshima also invited the participation of non-member countries including India, Brazil, Indonesia, Vietnam, Australia, South Korea, Comoros and Cook Islands, the Africa Union and the Pacific Islands.

 During the series of meetings, the issue for the world‘s most developed nations was to look for ways to counter economic pressure from China. G7 members are working with developing nations and other non-member states on global economic recovery and security issues.

This includes the G7 commitments to countering economic coercion. Where coercion is concerned, it primarily refers to whether a country applies pressure on others through export control or other means. The G7 countries stressed the need to support targeted nations or organizations, and this seems to be an obvious way to keep China in check.

 Supply chains were another focus of the meeting. There were talks of a pledge to ensure robust and sustainable access to key minerals and essential products made from natural resources. G7 invites emerging economies to help secure international supply chains, making this a clear move to resist what is seen as China’s growing assertiveness on the global stage.

This decision was made at the meeting of G7 finance chiefs. Agreeing to have emerging economies participate in the supply chain framework adds political elements to the finance meeting. The G7 countries are indicating that they intend to challenge authoritarian regimes, and this trend will continue on to the G7 leaders’ summit. The emerging economies are probably willing to join. What emerging nations really want is access to the world’s largest market.

Free Trade Agreement

Emerging nations want to grow their economies by exporting to the United States. The US Congress seems opposed to any new free trade agreement except NAFTA, therefore this could be an underlying reason developing countries are not happy. Thailand and Russia are working to create their own sphere of influence in their regions. Emerging economies want long-term support from world powers building long-term growth.

 The United States is aggressive in confronting China. Prior to the G7 summit, there was news about possibly decoupling the US economy from China. During the summit, Japan and European countries are not entirely backing this idea they agree with Washington that they need to contend with China on the security front, but on the economic front, if Japan and European countries cut ties with China, they perceive the damage to the countries will be vast. Japan as the chair of the G7 summit this year aimed at building bridges between China and the G7 countries so as not to worsen the relationships. European countries will support Japan's stance to a certain extent.

 The G7 summit in Japan, officially wrapped up after three days of discussion from supporting Ukraine to countering Russia at the meeting. Also leaders of the world’s wealthiest democracies discussed matters related to the control China has over the global economies. Ukraine also secured fresh military assistance, including a $375 million package from the United States. This too at a time when the United States has declared the largest external debt in the world and in the midst of an ongoing banking crisis.

 Regarding the G7 taking a stance on China, de-risking is the only term that works because decoupling is not feasible. The economies of the West of the G7 nations are so integrated with China that decoupling could be catastrophic for them as much as it would be for China if not more so. De-risking recalibrates the aspirations in terms of trying to diversify options for sourcing materials and industrial production to reduce the prospect of being coerced and challenged by China.

 There is a real sense that nations have a need to compete. There is also an attempt to foster unrestricted competition. Only now are the countries in the G7 fully waking up to the scale of the competition and competitive challenge that China presents. It seems the countries are looking forward to protecting their interests without unduly complicating matters for themselves, therefore, de-risking and not decoupling is definitely the best way of describing what the nations will aim for and work towards.

 Leaders of the world's major democracies presented a united front on China calling out, what they described as maligned economic practices and concerning military activity around Taiwan and in the South China Sea Chinese officials have accused the block of stirring up trouble in the Asia Pacific.

Anti-China alliance

Beijing has sought to discredit the G7, calling it an anti-China alliance led by the United States, it says Washington itself is guilty of economic coercion, pointing to trade restrictions imposed on Chinese technology companies.

 China is taking a host of steps by increasing its trading ties and investment with developing world countries that do not have the same concerns about exposure to China. Analysts say that G7's stance towards Beijing could have deepened the fault lines between China and the West. So far they remain economically intertwined, but increased distrust between both sides, means further tensions in the future are likely to rise.

 For countries such as Kenya which have strengthened ties with the Western powers as well as China, it is indeed a worrying scenario as it would be a difficult situation should the powers have increasing fault lines as the economies of the emerging nations may fall through the cracks.

Like all other summits, the G7 also had an overt agenda and covert understanding and it was a call for leaders to read between the lines. While a consensus did not emerge a hope stays alive within everybody’s heart.

Ritesh Barot is a business and financial analyst. [email protected]