G7 struggles with response to China ‘economic coercion’ threat

Tokyo, Japan – The G7 countries all agree on the threat of China’s economic coercion.

But reaching a consensus on concrete action to counter Beijing promises to be a challenge for the club of wealthy democracies amid divisions over how to manage ties with the world’s second-biggest economy.

The leaders of the G7 — Canada, France, Germany, Italy, Japan, the United Kingdom and the United States — have signalled 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. European Union leaders will also be present.

China’s use of coercive economic moves has been an issue of growing concern in the Asia Pacific and Europe in recent years, with Japan, South Korea, practically all exports to Russia after deeming it to be unrealistic.

Still, US officials have sought to raise expectations that the G7’s stand on economic coercion will go well beyond rhetoric.

On Tuesday, US Ambassador to Japan Rahm Emanuel, who has criticised the World Trade Organization dispute resolution as slow and called for the US to lead collective action against Chinese coercion, told his social media followers to “expect action”.

“G7 members are developing the tools to deter and defend against 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, DC, said he expected the G7 to make progress towards coordinated action due to the growing realisation of the dangers of economic overreliance on any one country.

“Europe has witnessed the impact of coercion within its ranks more vividly than the US, most recently in Lithuania, and endured the pain from overreliance on a sole supplier as it weaned itself off reliance on Russian energy,” Kennedy told Al Jazeera.

“A focus on de-risking by diversifying supply chain … by building partnerships with low- and middle-income countries through investment and aid is very unifying. It also can be presented to the Global South as a location for alternative sourcing.”

Henry Gao, a Chinese trade expert at Singapore Management University, said, however, that the actual implementation of any coordinated measures is likely to be difficult.

“It’s easy to come up with statements, but enforcement will be a big problem, especially for Asian countries which have very close economic ties with China,” Gao told Al Jazeera.

“One model that might be useful in this regard is the EU’s anti-coercion instrument, which moves the decision-making from the country level to the EU level, but this would be very hard to replicate even at the G7 level, not to mention on a global basis.”

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