For Biden, the meeting is a chance to build a united front with European allies and Japan to push back against China’s trade practices, a key part of his diplomatic platform. Europe is also eager to join it after four years of former President Donald Trump’s lonely foreign policy.
From this point of view, China seems to be playing the game with its hands.
Beijing’s aggressive diplomacy has already prompted the European Union to reassess a major investment deal signed with Beijing just as Biden took office, a move that at the time was seen as a blow to the new government’s plans. president to revive transatlantic relations.
In March, the EU and the UK imposed sanctions on China for human rights violations against Uyghur Muslims in Xinjiang province, prompting Beijing to retaliate with sanctions on the against EU and UK lawmakers, academics and think tanks. Shortly after, the EU suspended its investment deal.
“It is clear that China’s assertive position on the world stage has disillusioned a number of our trading partners and made them step back and rethink their position towards China, and in some cases brought them closer to the United States. “said Wendy Cutler, Managing Director of the Asia Society and former Deputy US Sales Representative.
China’s aggression is even greater towards its neighbors, diplomats note. After Australia questioned the origins of the Covid-19 pandemic at the World Health Organization, China retaliated with a litany of trade restrictions on its exports. He also made a list of political demands, such as the recognition of hotly contested land claims in the South China Sea.
“Australia is a guinea pig for this new strategy,” Matt Pottinger, former deputy national security adviser to Trump, told senators on Tuesday. “It’s being used against other countries as well and it’s the one they plan to use against the United States if and when it gets to the point where they no longer think they need access to our capital and to our technology. “
Biden wants to take advantage of Beijing’s confrontational posture. Generally speaking, the administration hopes to unite the G-7 countries on host economic issues so that they can vote en bloc in larger groups, such as the G-20 or the World Trade Organization.
The administration has already scored a victory in securing initial G-7 support for a minimum corporate tax rate of 15 percent, which would help unify their economies. The leaders will also unveil a new climate-friendly infrastructure fund to tackle the trillion-dollar China Belt and Road initiative, which spans 140 countries.
“The atmosphere is that transatlantic cooperation is back after Trump’s four years,” said Ho-fung Hung, a sociology professor at Johns Hopkins University who focuses on China. Even if the G-7 countries cannot agree on concrete actions at their first summit in the Biden era, “a declaration or a gesture of a united front to deal with China will be likely,” a- he declared.
The US will also sign a new EU-proposed Trade and Technology Council. While some details are still being worked out, National Security Advisor Jake Sullivan said on Monday that nations “will focus on aligning our approaches to trade and technology so that democracies and no one can others, not China or other autocracies, are writing the rules of technology commerce for the 21st century.
In addition to these actions, the Biden administration wants to unite its trading partners on a common approach to fight against the production of steel and aluminum of China, world leader. U.S. Trade Representative Katherine Tai made an international deal a prerequisite for Trump’s lifting of tariffs on steel and aluminum that angered U.S. allies and importers.
“I think overcapacity is an extremely important issue that needs to be addressed,” Cutler said, “especially if the US and the EU try to find a way to lift tariffs in these two areas.”
While the administration appears to be making progress in aligning its allies against Beijing, experts point out that their influence over the Chinese economy is limited. They note that most of China’s steel and aluminum exports go to developing countries, so the coordinated tariffs of the G-7 countries will do little to reduce Chinese production.
“This job can’t end at the G-7 because it’s not the right setup of countries,” Cutler added. “But the G-7 can build momentum to deal with severe overcapacity in steel and aluminum.”
The ability of the G-7 to fight China’s Belt and Road Initiative may be even more limited. While the size and design of the new “Clean Green Initiative” infrastructure program the G-7 will propose is still a secret, Sullivan said on Monday he would prioritize funding climate-friendly projects while including standards. strict transparency and oversight.
Lending experts welcome these rules, but warn that they may also give unattractive Clean Green program loans compared to money from Belt and Road, which generally defers to host country standards, often ignoring environmental and social safeguards.
The new initiative is “stuck between a rock and a hard place,” said Kevin Acker, research director at the Hopkins China-Africa Research Initiative. If he attaches too many conditions to his loans, he risks ceding projects to Chinese lenders.
The Clean Green initiative could still attract interested countries if its participants pour new money into the fund and subsidize interest rates so that they fall below those offered by Chinese lenders.
It could also include provisions on local labor and content, thwarting the Belt and Road practice of requiring Chinese contractors to build projects. But as of now, it’s unclear whether G-7 members are planning new funding or simply reallocating programs already in place.
“They are going to have to find the money if they are to offer a real alternative,” Acker said.