G-7 Haggles Over Strong U.S. Push to Counter China’s Clout

European Council President Charles Michel, Japan's PM Yoshihide Suga, Italy's PM Mario Draghi, European Commission President Ursula von der Leyen, Canada's PM Justin Trudeau, U.S. President Joe Biden, at the G-7 meeting in U.K. (Source: Bloomberg)

G-7 Haggles Over Strong U.S. Push to Counter China’s Clout

Group of Seven leaders debated how strongly to respond to China’s effort to win influence around the world and rebuke it over alleged forced labor practices -- with U.S. President Joe Biden taking a more hawkish stance and some other leaders wary of the risk the group is seen as an outright anti-China bloc.

Saturday’s talks at the G-7 summit on the Cornish coast of southern England have focused in part on China. During that session Biden, along with U.K. host Boris Johnson and Canada’s Justin Trudeau, pushed for specific, action-oriented measures to counter Beijing, according to a U.S. official.

Italian Prime Minister Mario Draghi and German Chancellor Angela Merkel, however, talked more about the cooperative nature of the G-7’s relationship with China, the U.S. official said. The leaders all discussed setting up a working group or task force on China.

Merkel told reporters later Saturday that she welcomed a task force, but didn’t want to frame it as an anti-China effort.

“This is not about being against something, but for something,” she said.

A European official familiar with the discussions said that all countries had toughened their stance toward China compared to previous G-7 meetings. This official said that Merkel and Draghi had pushed to define what Johnson’s task force would actually do, with the German chancellor suggesting that it needed a positive agenda focused on climate and trade if it is to be embraced by other countries. The person said that that the other leaders, including Johnson, agreed with the points Merkel raised.

The U.S. official downplayed any budding divide, saying the countries all agree on key principles and values. Saturday’s discussion was more about just how forcefully to push back against China, the official said.

More broadly, the G-7 has undergone a notable shift on China compared to a few years ago, another U.S. official told reporters later on Saturday.

The leaders agree on working together to respond to what they consider to be non-market economic practices by China, as well as speaking out on human rights abuses and forced labor in supply chains, including in Xinjiang, that official said.

The G-7 is expected to release the final summit communique midday on Sunday in the U.K., said the official, who declined to say if the word “China” would appear in it.

Biden, along with Johnson, Trudeau and French President Emmanuel Macron, pushed for plans more explicitly aimed at blunting China’s influence, the U.S. official said. Biden is asking the gathering to condemn what he calls China’s use of forced labor, including the treatment of its Uyghur Muslim minority in the western Xinjiang region.

The leaders plan a coordinated infrastructure initiative for developing countries, as China gains leverage by financing projects beyond its borders. The to-and-fro on Saturday leaves it unclear how strongly the summit’s final communique will speak about China.

G-7 Haggles Over Strong U.S. Push to Counter China’s Clout

The G-7 will launch a green alternative to China’s Belt and Road trade and infrastructure initiative at the summit, Bloomberg News reported previously. That would provide a framework to support sustainable development and the green transition in developing countries, people familiar with the matter said at the time.

Biden has touted the measure, but Germany is hesitant about the proposal, arguing there are already western actions around the world working to limit China’s advance, one European official said. Germany is also reluctant to pledge a concrete sum for such a project, the official said.

For advocates, the various proposals are designed to offer an explicit contrast between Beijing’s approach to foreign relations and the alternative offered by industrialized democracies, according to two other U.S. officials who briefed reporters on the plans on the condition of anonymity. Biden has in recent months argued the world is at an “inflection point” in a struggle between autocracies and democracies.

“We’re going to make it clear that the United States is back and democracies of the world are standing together to tackle the toughest challenges and the issues that matter most to our future,” Biden said Wednesday upon arriving in the U.K.

According to one U.S. official, Saturday’s debut session also included a discussion of how to jointly address an increase in cyber crimes and ransomware, including on whether or not ransoms should be paid. The leaders also discussed how China is engaging in the World Trade Organization and other international organizations, and how forcefully the G-7 should object to some of its actions, the official said.

Another foreign policy session later in the day will cover issues in other countries, including Russia, Ethiopia, Afghanistan, Iraq and Belarus, the official said.

Virus Diplomacy

China has worked to build international alliances by underwriting infrastructure projects in dozens of countries. It also is sending coronavirus vaccines to the developing world, bolstering its international standing in places like Latin America and Southeast Asia through donations.

The announcement planned for Saturday includes a program dubbed Build Back Better for the World that is intended as an alternative to the Belt and Road Initiative, a massive trillion-dollar undertaking that has seen Beijing finance a network of infrastructure projects.

The G-7 plan -- a play on Biden’s Build Back Better domestic agenda -- would offer alternative infrastructure opportunities with a greater emphasis on labor and environmental standards, transparency, and private sector involvement, the pair of officials said.

Yet it’s not clear how -- or if -- the announcement will substantively change existing infrastructure efforts by the U.S. and its allies in the developing world. The Biden administration will ask Congress to “augment” available development financing resources, one of the officials said.

The measure “will collectively catalyze hundreds of billions of dollars of infrastructure investment for low- and middle-income countries in the coming years,” a White House statement Saturday said.

On forced labor, Biden pressed fellow G-7 leaders on Saturday to take more concrete action by making it clear China’s treatment of Uyghurs is both morally outrageous and unfair economic competition, the officials said. A draft of the communique seen by Bloomberg cites a pledge to better tackle forced labor, but does not mention China by name. China denies claims of ill-treatment of Uyghurs and other ethnic minorities.

Biden and Trudeau spoke on the sidelines of the summit Saturday, a Canadian official said. Trudeau again raised the case of two Canadians detained in China, Michael Kovrig and Michael Spavor, who were seized in apparent retaliation for Canada’s arrest of a powerful Huawei Technologies Co. executive, Meng Wanzhou, after a U.S. extradition request. The official added that Canada increasingly feels squeezed between the two superpowers.

The White House has come under intense pressure from unions, human-rights groups and lawmakers to ban imports made with forced labor in Xinjiang. Administration officials for months have said they intend to remove forced labor products from U.S. supply chains but have yet to act.

A group of Democratic House members has asked U.S. Customs and Border Protection to prohibit imports of polysilicon, a crucial material in solar panels, made with forced labor in China, adding the agency has investigated and promised imminent action three months ago.

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