AT G-7 SUMMIT, CONTAINMENT OF CHINA GOES GLOBAL / GEOPOLITICAL FUTURES

At G-7 Summit, Containment of China Goes Global

The advanced economies delivered their most detailed articulation yet of a shared position on Beijing.

By: Antonia Colibasanu

The leaders of the G-7 countries met last week in Hiroshima for their annual summit. 

The club includes the West’s most advanced economies (Canada, France, Germany, Italy, Japan, the United Kingdom and the United States, as well as high-level representatives from the European Union). 

However, this year the group also invited the leaders of Australia, Brazil, Comoros (current chair of the African Union), the Cook Islands (chair of the Pacific Islands Forum), India (G-20 leader this year), Indonesia (chair of the Association of Southeast Asian Nations), South Korea and Vietnam. 

The attendance of Brazilian and Indian officials was particularly important, since both countries are members of the BRICS group – which also includes Russia, China and South Africa and aspires to rival or even supplant the dominant Western powers.

The G-7 leaders announced new sanctions against Russia over its invasion of Ukraine, targeting Russia’s defense industry, technology, and metals and mining sectors. 

The EU is also preparing its own new batch of sanctions. 

But the significance of this summit went way beyond the expanded list of attendees or the new sanctions. 

In the group’s joint communique, the G-7 pledged to increase coordination on economic security and delivered their most detailed articulation yet of a shared position on China. 

They stressed the need to cooperate with the world’s second-largest economy where possible, but also to counter Beijing’s “malign practices” and coercion. 

This underlines the long-term concern of the G-7, as well as some emerging powers like India, about China’s growing influence in the Asia-Pacific and beyond.

Global Infrastructure

To reduce their overreliance on China, Western governments are encouraging firms to relocate their operations at home (reshoring), nearby (nearshoring) or to friendly countries (friendshoring). 

However, relocating production won’t go far enough if China still controls or shapes access to key resources such as rare-earth elements.

Therefore, the U.S. is building the global economic infrastructure necessary to ensure its own economic security and support its allies. 

The U.S. program is called the Partnership for Global Infrastructure and Investment, and together with the EU’s Global Gateway initiative it is the West’s answer to China’s Belt and Road Initiative. 

The programs are intended to support and grow Western business in emerging markets, in addition to securing alternative supply chains to deprive Beijing of a stranglehold on key resources or technologies.

In the short term, the endeavor also counters Russia’s economic warfare against Europe and its strategy of building new trade and investment corridors to help it circumvent Western sanctions. 

For example, during the Hiroshima summit, the Export-Import Bank of the United States expressed interest in a $99 million investment in Romania’s RoPower Nuclear S.A. to support design studies. 

This would build on previous U.S. government support for the development of Romania’s first-of-its-kind small modular reactor plant, which uses U.S. technology and engineering and construction services. 

EXIM and the U.S. International Development Finance Corp. also said they were interested in offering billions of dollars to support the project’s deployment. 

When completed, the new plant will support European energy independence, depriving Moscow of important leverage.

In Africa, the United States is looking to invest in a rail expansion, part of the Lobito Corridor, that would connect the Democratic Republic of Congo and Zambia with global markets via Angola. 

The investment would supplement other investments and pledges from U.S. and European consortiums, in addition to support from the African Development Fund. 

Eventually, the Lobito Corridor could connect Angola’s Lobito port on the Atlantic with Tanzania on the Indian Ocean, enabling multisector development and connecting cobalt and lithium mining sites in the region. 

At the same time, the U.S. announced $1.6 billion in funding for energy and digital infrastructure development in Angola, Tanzania and Sierra Leone.

These investments will not only improve U.S. and European businesses’ access to Africa, but they will also make the recipient countries less likely to fall further under the influence of Russia or China. 

The war in Ukraine adds urgency for the West to win over the Global South, which Russia is also courting to serve as an alternative market. 

The long-term U.S. goal, however, is to make certain that China doesn’t grow powerful enough to challenge U.S. hegemony.

The Asia-Pacific Focus

Nowhere is this more important for Washington than in the Asia-Pacific region. 

On the sidelines of the G-7 summit, the leaders of the Quad security grouping (Australia, India, Japan and the U.S.) were able to meet. 

(Though a formal Quad summit was supposed to take place this week in Sydney, it was canceled so U.S. President Joe Biden could return home and tackle the debt ceiling debate.) 

Also present was the U.K., which is following through on its strategic “tilt to Asia,” part of its 2021 Global Britain strategy. 

The Quad is regarded as the most important security partnership to prevent China from achieving regional dominance. 

Each Quad member has its own priorities and limitations, but they share the goal of containing China’s own strategic ambitions. 

To do so, they will need to be willing, both individually and collectively, to counter and deter Beijing in the economic realm.

 

Current U.S. strategy also entails democracy promotion and equipping smaller Pacific states with the means to deter unofficial coercion by Chinese maritime forces. 

To that end, the U.S. struck 20-year extensions of its Compact of Free Association with the Federated States of Micronesia and Palau. 

The deals come with $4.1 billion in assistance for the countries in the coming decades. 

The U.S. also signed a new maritime and security agreement with Papua New Guinea that will support PNG’s defense capabilities and provide $45 million to help mitigate the effects of climate change, fight transnational crime and improve public health. 

Last but not least, the U.S. and Taiwan agreed last week on the first stage of a bilateral trade deal, less than a year after negotiations began, demonstrating their increasingly close ties.

In another sideline discussion, the U.S. and Australia agreed to ramp up cooperation on critical minerals, noting that climate and clean energy are a centerpiece of their alliance. 

Washington and Canberra are setting up a series of working groups, including a ministerial-level task force on critical minerals and another group aimed at crafting an action plan for stronger industrial collaboration. 

According to a statement, such moves are intended not only to “streamline technological and industrial base collaboration” but also to accelerate and strengthen implementation of the Australia-U.K.-U.S. (Aukus) security pact.

Australia shares the U.S. desire to keep regional countries from drifting entirely into China’s orbit. 

Canberra sees the Quad as a rival to Beijing’s efforts to reshape global governance to better suit China’s interests. 

Australia wants to deliver regional security through initiatives focused on health, clean energy, regional connectivity and maritime domain awareness – all areas that affect governance. 

Therefore, Australia is setting aside $1.9 billion to strengthen relationships in the Pacific.

The United Kingdom, meanwhile, aspires to grow its trade in the Asia-Pacific, especially now that its departure from the EU has erected new trade barriers with Europe. 

The U.K. also has an interest in developing its diplomatic partnerships in the region, not only for its own benefit but also to strengthen its strategic alliance with a China-focused Washington. 

London’s strategic policy documents describe Chinese strategic investments in the Indo-Pacific, as well as in Africa, the Middle East and Europe, as a security risk.

This is the framework within which to consider last week’s signing of the Hiroshima Accord between the U.K. and Japan. 

The agreement, which includes collaboration on security and innovation, was preceded by several public and private bilateral investment pledges. 

Japanese corporations have committed to invest 17.7 billion pounds ($21.9 billion) in British energy and real estate projects. 

Octopus Energy's 1.5 billion-pound expansion across the Asia-Pacific region was the standout statement from the British business sector. 

The governments also agreed to cooperate in the semiconductor sector and to collaborate on research and development and skills exchange. 

While meant to ensure the resilience of British supply chains, the Hiroshima Accord fits with the broader Western framework to counter Russia and China.

Meanwhile, this year’s G-7 host, Japan, has steadily increased its defense spending in recent years as part of a new focus on security. 

Last December, the government released three new security documents, including the Defense Buildup Plan, a five-year strategy to substantially boost the country’s defense capabilities. 

The plan, which will cost some $316 billion to implement, signaled growing worries regarding China and global security. 

In March, Prime Minister Fumio Kishida paid an unexpected visit to Ukraine that coincided with Chinese President Xi Jinping’s visit to Moscow.

Key to Japan’s efforts to revamp its security strategy is strengthening ties with its allies, including of course its Quad partners. 

The government said $75 billion will be invested in infrastructure in the Indo-Pacific region by 2030, using public and private funding, loans and other mechanisms. 

Tokyo also announced it would launch a new framework to attract investments and support young entrepreneurs in the region, as part of changes to the country’s Official Development Assistance charter.

On a recent visit to India, Kishida expressed his hope that the Quad would serve as a bridge to the Global South and a tool to forge relations with like-minded countries. 

Relatedly, Japan said last year that it was preparing to enter preliminary consultations with the Philippines on a “reciprocal access agreement” – similar to the Philippines’ Visiting Forces Agreement with the United States – that will boost defense cooperation. Japan also has an RAA with Australia.

India is a key part of the Global South with which Japan hopes to collaborate on infrastructure development, marine security and disaster relief. 

New Delhi, which took over the G-20 presidency late last year, likely has the most complicated relationship with the Quad of the four members. 

The grouping’s resurgence in 2017 and subsequent progress were directly tied to escalating border tensions between India and China. 

They also coincided with shifts in relations between the U.S. and China. 

This resulted in the first strategic alignment between New Delhi and Washington on China, and Asia more broadly, since World War II.

However, some see India as the “weak link” in the Quad because of its unwillingness to join the West in denouncing Russia’s invasion of Ukraine and its opposition to elevating the grouping to a formal security alliance. 

It should be kept in mind, however, that the Quad is not a formal partnership. 

Unlike Australia and Japan, India is not a treaty ally of the United States. 

Washington has essentially acknowledged as much by not criticizing India too harshly for continuing to do business with Russia. 

While Moscow poses the most immediate threat to the West, the U.S. recognizes that China presents a bigger and longer-term challenge, which India’s support is crucial to addressing.

Considering China’s efforts to mobilize anti-Western sentiments, India’s membership in the Quad gives the grouping considerable political weight among other members of the Global South. 

Relatedly, India pledged last week to expand trade and investment relations with Fiji and Papua New Guinea. 

To be sure, New Delhi has been wary of getting too cozy with its Quad partners due to its long-standing nonalignment policy. 

Still, since the alliance has resumed its activities, India has grown closer to the U.S. and its Asian allies than ever before. 

Though it’s opposed to the Quad becoming a military alliance, it has considerably strengthened bilateral defense cooperation with each of the forum’s other members. 

This ultimately gets India closer to the multinational network the U.S. is building to counter Russian influence and, in the longer term, to contain China.

The democracies in the region, as well as major developed countries, have made significant strides in forging greater cooperation, especially on economic matters. 

The platforms through which they intersect are less important than the degree to which these countries have cemented their ties in recent years. 

While the U.S. is a common denominator in all these alliances, it’s the willingness of the other nations to participate, based on their own self-interests, that keeps them going.