Tensions with China on the G7 menu

Both an essential partner and a formidable competitor to the world's great democracies, China is on the agenda of the G7 summit on Friday in Italy: the leaders intend to defend their economies and geostrategic interests, while avoiding escalation with Beijing.

Meeting since Thursday in Borgo Egnazia, near Bari, in southern Italy, the “Group of 7” (United States, Germany, France, Italy, United Kingdom, Canada, Japan ) must discuss Beijing's industrial and commercial policy, whose subsidized production is flooding the markets.

Joe Biden, Olaf Scholz, Emmanuel Macron and their counterparts will also address the military situation and diplomatic in the “Indo-Pacific” zone with the focus on territorial disputes between Beijing and its neighbors, including Taiwan, and the security of maritime routes in the South China Sea. They will also discuss the support of China and North Korea for the Russian military effort in its war against Ukraine.

“The G7 countries are on the same line vis-à-vis China,” a Japanese government source told AFP.

(l-r) European Council President Charles Michel, German Chancellor Olaf Scholz, Canadian Prime Minister Justin Trudeau, French President Emmanuel Macron, Italian Prime Minister Giorgia Meloni, Japanese Prime Minister Fumio Kishida, British Prime Minister Rishi Sunak and the President of the European Commission Ursula von der Leyen, in Borgo Egnazia, June 13, 2024 in Italy © AFP – Ludovic MARIN

The United States and the European Union are concerned about the risk posed to global markets by the increase in Chinese exports of low-cost products fueled by subsidies for new technologies, particularly in the sectors of photovoltaic power, electric vehicles and lithium batteries.

Beijing's recent restrictions on exports of minerals crucial to sectors like electric vehicles and telecoms will be also on the menu.

Trade relations between China and the West are currently sources of tension. Brussels announced on Wednesday the imposition of up to 38% additional customs duties on imports of Chinese electric vehicles into the EU.

– “Industrial overcapacity ” –

The United States, the European Union and Japan have all expressed their concerns about Chinese “industrial overcapacity” endangering Western societies which are struggling to compete against this flood.

US Treasury Secretary Janet Yellen in Washington, April 19, 2024 © AFP – SAUL LOEB

China considers the accusations baseless, but US Treasury Secretary Janet Yellen last month urged her G7 counterparts at a meeting in Stresa in northern Italy to present “a clear and united front” on this subject.

At the end of their talks, the ministers warned that they would consider measures to “guarantee fair conditions” for all savings.

The threat launched on Wednesday by the EU on Chinese imports, despite the reluctance of Berlin which fears a trade war, is devoid of any “factual and legal basis”, Beijing said on Thursday.

“China reserves the right to file a complaint with the WTO and take all necessary measures to resolutely defend the rights and interests of Chinese companies,” said He Yadong, spokesperson of the Ministry of Commerce.

Last month, the United States for its part drastically increased customs duties on certain Chinese production, notably by 100% on electric vehicles. © AFP – STR

Last month, the United States for its part drastically increased customs duties on certain Chinese production, notably by 100% on electric vehicles, with President Joe Biden going so far as to accuse China of “cheating.”

Leaders will also address on Friday recent Chinese restrictions on exports of rare minerals like gallium, germanium and graphite, crucial to industries like telecoms, electronics and batteries.

But the talks on China will not be limited to trade: Beijing's aid to the Russian military effort will also be on the menu.

– Pope and IA –

The G7 “agrees to act together” against the supply by Beijing to Moscow of “materials necessary for its war machine”, President Joe Biden said on Thursday during a joint press conference with his Ukrainian counterpart Volodymyr Zelensky.

The latter, however, assured that President Xi Jinping had “given him his word”, during from a telephone interview, that Beijing would not sell weapons to Russia.

Photo released by the Russian state agency Sputnik of Chinese President Xi Jinping (d) and his Russian counterpart Vladimir Putin, May 16, 2024 in Beijing © POOL – Alexander RYUMIN

The G7 is due to welcome non-member heads of state and government during the day, including the Indian Narendra Modi, Abdullah II of Jordan, the Turk Recep Tayyip Erdogan, the Argentinian Javier Milei and the Brazilian Luiz Inacio Lula da Silva.

Pope Francis is also expected in the early afternoon to speak about artificial intelligence.

Thursday, the G7 announced an agreement on the use of interest generated by frozen Russian assets, for the benefit of Kiev, which this year will receive $50 billion in loans paid for by this windfall.

The day was also marked by friction between France, the United States and Italy, the host country, criticized for opposing an incisive formulation in favor of the defense of right to abortion in the summit's final declaration.

The G7 leaders launched their work on a lighter note on Friday, singing a “happy birthday” to the German Chancellor Olaf Scholz, who is celebrating his 66th birthday, according to a diplomatic source.

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