G7 vows to counter 'economic and national security threats' posed by China
Leaders of the Group of 7 nations vowed on Friday to take collective action against Chinese industrial overcapacity, "unfair" state subsidies and state-led dominance of strategic industries and threatened sanctions against Chinese financial institutions that support Russia's wartime economy.
"There was a collective diagnosis and collective agreement to confront the economic and national security threats from China," a senior US administration official said at the conclusion of the three-day summit in Italy.
"Some of China's actions to support the Russian war machine are now not just threatening Ukraine's existence but European security and transatlantic security," he added, speaking to reporters on background.
Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.
"And that's why the sanction measures that were announced this week are so serious."
On Thursday, the US Treasury targeted the Moscow Exchange, Russia's main financial marketplace, and broadened the risk of secondary sanctions for any foreign financial institution doing business with Russia's war economy.
G7 members also vowed Friday to end allegedly unfair lending practices by China whereby the World Bank and other Western-led multilateral institutions inject money into developing countries only to see Beijing recover 100 per cent of its loans from the same nations.
"China has been met taking money out of low and middle income countries," the official said. "There's a collective agreement to stop that form of free riding."
In its leaders' statement, the group stressed that it welcomed "constructive and stable" relations with China, was not trying to undercut its development and recognised its important role in global trade.
They added, however, that "we will continue to take actions, as necessary and appropriate, to protect our workers and businesses from unfair practices, to level the playing field and remedy ongoing harm."
The US this week imposed fresh sanctions on China-based firms supplying semiconductors to Russia amid worries over Beijing's increasingly aggressive stance against Taiwan and run-ins with the Philippines over rival maritime claims.
"China is not supplying weapons [to Russia] but the ability to produce those weapons and the technology available to do it, so it is in fact helping Russia," US President Joe Biden said on Thursday after signing a bilateral security pact with Ukrainian President Volodymyr Zelensky.
On Thursday, the first day of their meeting in southern Italy, the G7 agreed on a deal to provide US$50 billion of loans for Ukraine backed by interest from frozen Russian assets - hailing the accord as a powerful signal of Western resolve.
Beijing has closely watched the West's unified response to Russia's invasion of Ukraine as well as Moscow's efforts to thwart and circumvent sanctions, analysts said, as it considers any future move to take Taiwan by force.
President of the EU Council Charles Michel, Germany's Chancellor Olaf Scholz, Canada's Prime Minister Justin Trudeau, France's President Emmanuel Macron, Italy's Prime Minister Giorgia Meloni, US President Joe Biden, Japan's Prime Minister Fumio Kishida, British Prime Minister Rishi Sunak, and President of the European Commission Ursula von der Leyen, stand for a family photo during the G7 summit on Thursday. Photo: dpa alt=President of the EU Council Charles Michel, Germany's Chancellor Olaf Scholz, Canada's Prime Minister Justin Trudeau, France's President Emmanuel Macron, Italy's Prime Minister Giorgia Meloni, US President Joe Biden, Japan's Prime Minister Fumio Kishida, British Prime Minister Rishi Sunak, and President of the European Commission Ursula von der Leyen, stand for a family photo during the G7 summit on Thursday. Photo: dpa>
On other fronts the G7, made up of Canada, France, Germany, Italy, Japan, the United Kingdom and the US, also called on China to end its export control measures, particularly involving critical minerals, that could lead to significant global supply chain disruptions.
The group also called on China to "uphold its commitment to act responsibly in cyberspace", voiced its opposition to China's militarisation, and "coercive and intimidation activities in the South China Sea" and reaffirmed that "there is no legal basis for China's expansive maritime claims" in the region.
And on other fronts, the group urged Beijing to press Moscow to "stop its military aggression and immediately, completely and unconditionally withdraw its troops from Ukraine", adding that it remained concerned about China's opaque and accelerating expansion of its nuclear arsenal.
The statement also voiced collective concern about human rights in China, including in Tibet, alleged forced labour in Xinjiang and "China's crackdown on Hong Kong's autonomy".
The senior US official said G7 leaders are in agreement that China under the leadership of President Xi Jinping appeared convinced that democracies are in structural decline, leading Beijing to "take tactical risks" to realise its strategic ambition of economic and technological primacy.
"None of the leaders felt as though the trend line was likely to change, because market oriented reforms require a loss of control that the leadership appears unwilling or unable to accept," he said, adding that China's model is built on national champions and state-owned enterprises, fuelled by extensive government subsidies, non-tariff barriers, weak labour standards and "sometimes outright theft".
"The implication is that G7 businesses are in an unfair competition against the Chinese government," undercutting G7 supply chain resilience and national security, he added. "I think it's just an acceptance of the competition that we're in."
Another senior US administration official with the National Security Council, speaking earlier on Friday, said other G7 member nations were expected to follow the US and European Union lead in calling out and punishing Chinese overcapacity, alleged unfair trade practices and Beijing's support for Russia.
This week, Washington imposed fresh sanctions on China-based firms supplying semiconductors to Russia amid worries over Beijing's increasingly assertive stance against Taiwan and run-ins with the Philippines over rival maritime claims.
"China is not supplying weapons [to Russia] but the ability to produce those weapons and the technology available to do it, so it is in fact helping Russia," US President Joe Biden said on Thursday after signing a bilateral security pact with Ukrainian President Volodymyr Zelensky.
The European Union announced this week it would slap additional tariffs on Chinese-made EVs bringing them from around 10 per cent to as high as 38 per cent.
This followed an executive order signed by Biden last month that would increase US tariffs on Chinese steel, aluminum, semiconductors, electric vehicles, batteries, critical minerals, solar cells, ship-to-shore cranes, and medical products. That would see a near quadrupling of import taxes on Chinese EVs to 100 per cent.
The US move comes as Biden seeks re-election in a tough race with former president Donald Trump, who has repeatedly vowed to impose a 60 per cent tariff on all Chinese imports if he regains the presidency.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2024. South China Morning Post Publishers Ltd. All rights reserved.