It’s hard for G7 to counter China’s economic coercion

The G7 (Group of Seven) summit to be held from 19 to 21 May 2023 in Hiroshima, Japan will bring together leaders from the world’s leading industrialized nations to discuss issues of global importance. One of the key topics on the agenda is China’s growing economic coercion, which has become a concern for many countries around the world.

Although the G7 consists the seven major advanced economies in the world, including the United States, Canada, France, Germany, Italy, Japan, and the United Kingdom, the question that remains is whether the G7 can effectively deal with China’s economic coercion.

Economic Coercion

China’s economic coercion tactics have been on the rise in recent years, with Beijing using its economic power to pressure other countries into making political concessions. This includes imposing trade restrictions, leveraging access to its markets, and threatening to withhold investment.

A Rand Corporation research finds that:

“China has made increasingly belligerent use of its economic leverage, while affected states have often been left to respond on their own.”

Countries such as Australia, Canada, and the United States have all experienced such tactics firsthand, with China using economic pressure to influence policy decisions.

Past Efforts

The G7 leaders have acknowledged the need to counter such behavior, particularly in the areas of trade, technology, and investment. In their 2021 summit, the G7 leaders pledged to counter economic coercion and called for a fair, transparent, and rules-based international economic system. They also announced plans to support an ambitious agenda for economic recovery and to promote open trade.

The G7 leaders also expressed support for the reform of the World Trade Organization (WTO) to ensure that it remains relevant and effective in addressing current economic challenges. This includes efforts to strengthen the rules on subsidies and address the issues of forced technology transfer and intellectual property theft.

Nevertheless, China has taken a number of measures, including diplomatic pressure, economic retaliation, and alternative economic initiatives, to counter the G7's efforts to address its economic coercion tactics.

The Caveats

While the G7's commitments are certainly a step in the right direction, it remains to be seen whether they will be sufficient to deal with China’s economic coercion. China’s economic power has grown significantly in recent years, and it has used this power to challenge the established global order. The country’s Belt and Road Initiative, which aims to increase China’s economic and geopolitical influence, has been a source of concern for many countries.

The Belt and Road Initiative is a challenge to the G7's economic leadership.

Moreover, the G7's ability to implement its commitments will depend on the collective and individual actions of its member countries. The G7 does not have the power to impose binding regulations or enforce economic sanctions on China. And China could threaten countries that take action against its economic coercion tactics.

For example, China has imposed trade restrictions on Australian exports in response to Australia’s calls for an independent inquiry into the origins of COVID-19.

Therefore, it will depend on individual countries to take action to address China’s economic coercion, whether through bilateral negotiations, domestic policies, or cooperation with other countries.

Conclusion

In sum, the G7 has the potential to address China’s economic coercion, but its success will depend on the specific actions that the member countries take. The G7 leaders have acknowledged the problem and have made commitments to address it, but it remains to be seen whether these commitments will be sufficient.

The bottom line is that it will be up to individual countries to take action to counter China’s economic coercion, and this may require a coordinated response from the broader international community.