China and G7 Nations Trade Accusations of Economic Coercion, Deepen Geopolitical Fault Lines

Tensions rose in the wake of the G7 summit last weekend, as China weathered accusations of being an economic and security threat, while countering with its own similar accusations against the West. The meeting of the multilateral group—composed of the U.S., U.K., France, Germany, Italy, Canada, and Japan, and punctuated by Ukrainian President Volodymyr Zelensky’s surprise visit—underscored the extent to which China has become entrenched as a geopolitical antagonist in the eyes of many Western leaders. David Pierson and Chris Buckley from The New York Times described the parallels between the growing convergence of Ukraine and the G7 countries on one hand, and that of Russia and China on the other:

The contrast between President Volodymyr Zelensky of Ukraine receiving more arms guarantees from President Biden at the G7 and [Russian Prime Minister] Mr. Mishustin seeking more economic support for Russia from China’s top leader, Xi Jinping, underscores how the deepening geopolitical divisions have been exacerbated by the war.

“China is ready to double down on its relationship with Russia following the G7 summit because the central theme of that summit comprised not only Russia’s invasion of Ukraine but also China and how the West should deal with it,” said Alexander Korolev, a senior lecturer at the University of New South Wales in Australia, who studies Chinese-Russian relations.

“The summit and Zelensky’s presence at it have marked a more apparent and deeper geopolitical divide between the West on the one hand and China and Russia on the other hand,” he added. [Source]

One major outcome of the summit was the formation of a new framework, called the Coordination Platform on Economic Coercion, which aims “to increase [the G7’s] collective assessment, preparedness, deterrence and response.” It is largely seen to be directed at China. Josh Lipsky, the senior director of the Atlantic Council’s GeoEconomics Center, said that at the G7’s summit in the U.K. two years ago, “It would have been hard to believe that European leaders would sign on to a statement that was so specifically directed at Beijing. But […] the G7 has shown it will increasingly focus on China and will try to maintain a coordinated policy approach. That’s a major development.” A U.S. White House fact sheet released after the summit contained a section outlining the G7’s “united” position on China, and the forum’s “need to respond to concerns and to stand up for our core values”:

Economic security issues. The G7 will push for a level playing field for their workers and companies and seek to address the challenges posed by China’s non-market policies and practices and foster resilience to economic coercion. They recognized the necessity of protecting certain advanced technologies that could be used to threaten our national security.

Indo-pacific. Leaders reaffirmed the importance of peace and stability across the Taiwan Strait and called for a peaceful resolution of cross-Strait issues. They highlighted that there is no change in the basic positions of the G7 members on Taiwan. They registered their serious concern […] about the situation in the East and South China Seas and reaffirmed their strong opposition to any unilateral attempts to change the status quo by force or coercion.

Core values. G7 Leaders voiced concerns about the human rights situation in China, and called on China not to conduct interference activities or undermine the integrity of our democratic institutions. [Source]

Some of the G7’s resolutions sought to clarify that its approach “not designed to harm China” nor “to thwart China’s economic progress and development.” Instead of “decoupling,” the favored description used to forge a common strategy was “de-risking,” a term that was recently popularized by European Commission President Ursula von der Leyen. The nuanced, less-hawkish tone reflected concerns from Europe and Japan about antagonizing Beijing. But some individual statements conveyed a harsher stance. British Prime Minister Rishi Sunak said China posed “the greatest challenge of our age” in regards to global security and prosperity, and that it was “increasingly authoritarian at home and abroad.”

The Chinese government reacted furiously to the G7’s newfound resolve to present a unified front. In response to Sunak’s statement, the Chinese embassy in the U.K. issued a statement of its own: “The relevant remarks by the British side are simply parroting words from others and constitute malicious slanders in disregard of the facts. China firmly opposes and strongly condemns this.” As Al Jazeera reported, China summoned the Japanese ambassador to protest the summit:

China’s Vice Foreign Minister Sun Weidong has summoned the Japanese ambassador to register protests over “hype around China-related issues” at the Group of Seven (G7) summit over the weekend, the foreign ministry said in a statement.

[…] Sun said Japan’s actions were detrimental to China’s sovereignty, security and development interests.

“Japan should correct its understanding of China, grasp strategic autonomy, adhere to the principles of the four political documents between China and Japan, and truly promote the stable development of bilateral relations with a constructive attitude,” he added. [Source]

Throwing an early punch before the G7 summit began, China’s Ministry of Foreign Affairs released “America’s Coercive Diplomacy,” a blistering 5,000-word report that was amplified by Chinese state media and diplomats online. The release of the report coincided with the opening of the China-Central Asia Summit in Xi’an, during which Xi Jinping unveiled an ambitious “plan for Central Asia’s development, […] taking on a new leadership role in a region that has traditionally been a Russian sphere of influence.” As the end of the G7 summit approached, the Chinese Foreign Ministry urged the G7 nations to “stop ganging up to form exclusive blocs, stop containing and bludgeoning other countries, stop creating and stoking bloc confrontation and get back to the right path of dialogue and cooperation.” Simone McCarthy at CNN described how the Chinese Foreign Ministry’s criticism specifically labeled the U.S. as the main culprit:

Beijing’s retort later Saturday urged the G7 “not to become an accomplice” in American “economic coercion.”

“The massive unilateral sanctions and acts of ‘decoupling’ and disrupting industrial and supply chains make the US the real coercer that politicizes and weaponizes economic and trade relations,” the Foreign Ministry said in a statement.

“The international community does not and will not accept the G7-dominated Western rules that seek to divide the world based on ideologies and values,” it continued. [Source]

China’s reaction this time is quite intense,” said Wang Jiangyu, a professor at City University of Hong Kong. Moritz Rudolf, a research scholar and fellow at Yale University’s Paul Tsai China Center, said that “Beijing’s reaction (especially the early timing of its release) underlines that tensions in the region are already quite high and likely to increase further.” That said, commenting on the freeze in Sino-American relations, U.S. President Joe Biden predicted at the end of the summit: “I think you’re going to see that begin to thaw very shortly.” He also revealed that the U.S. was considering easing sanctions on China’s defense minister, General Li Shangfu, who was sanctioned in 2018 in response to Chinese purchases of Russian weapons. The move could help restart bilateral military communications. Commenting on this potential thaw, Brookings senior fellow Ryan Haas outlined several adjustments available to the U.S. to push its relationship with China in a more constructive direction:

First, Washington can reprioritize direct, private diplomacy with China. Public spectacles, such as the March 2021 meeting between U.S. and Chinese diplomats in Anchorage or the more recent dust-up between Blinken and Politburo member Wang Yi on the margins of the Munich Security Conference, are counterproductive. They limit America’s ability to influence how China pursues its interests, shake the confidence of America’s allies in the soundness of American strategy, and poison personal relations between participants. Pushing Xi publicly will generate the opposite of the intended effect. Private letters, phone calls, quiet conversations among national security advisors, drama-free visits, and work through embassies will hold greater prospects of making progress on American priorities with China.

Second, the United States should pause efforts with Beijing to negotiate crisis management mechanisms and principles for the conduct of the relationship. At a tactical level, there is no scope for progress on these issues in the current climate of relations. Pushing these topics now will be more aggravating than risk-reducing.

[..] Third, Washington needs to get back into the business of channeling Xi’s ambitions to constructive ends. Xi wants to enjoy dignity and respect on the world stage. He wants to be viewed as a global leader and a peacemaker. Washington should look for ways to harness these ambitions to support its own priorities. For example, rather than pouring cold water on Beijing’s inability to mediate Russia’s war of aggression against Ukraine, the United States and its global partners should look for discrete areas to urge China to take on greater responsibility for lowering tensions and relieving suffering. Washington could push Beijing, for example, to take the lead in pressuring Russia to keep grain routes open through the Black Sea for the sake of global food security. Washington and its partners could encourage Beijing to take the lead in setting expectations in Moscow and Kyiv that attacks against nuclear power plants such as Zaporizhzhia would constitute nuclear terrorism and provoke a harsh international response. Beijing also could be urged to organize international efforts to pool funding for Ukraine’s $411 billion reconstruction bill after the war concludes. [Source]

China, meanwhile, has not signaled a strong desire to thaw relations with the U.S. As Lingling Wei reported for The Wall Street Journal, on the same day that Biden was hinting at the resumption of high-level exchanges, the Chinese government announced that U.S. tech firm Micron had failed a security review, and warned Chinese companies against using Micron’s products:

The Cyberspace Administration of China said Sunday its review of Micron products found “significant security risks” that would affect national security and warned operators of key Chinese information infrastructure—such as telecommunications firms and state-owned banks—against purchasing the company’s goods.

[…] The Chinese ban came less than two months after Beijing announced an investigation on imports from Micron, the largest memory-chip maker in the U.S., in what seemed a political gesture aimed at hitting back at a sweeping ban Washington put in place late last year on selling advanced chip-making technology to China. 

[…] “Other domestic customers may also consider this to be a political signal to stop buying, and even replace, their products,” said Lester Ross, a Beijing-based lawyer at WilmerHale, who advises American companies in China. [Source]

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