US President Joe Biden wants to scale back risks from China.
Mandel Ngan | afp | Getty Images
The G-7 sent its strongest message yet to China over the weekend, but an analyst warned that isolating Beijing was “unattainable” and “dangerous.”
The world’s seven largest economies agreed at a summit in Hiroshima, Japan, to scale back risk and diversify their supply chains away from China, amid fears of economic coercion. There may be a growing awareness amongst Western countries that their economies are heavily dependent on China. The coronavirus pandemic has shed light on the intricacies of critical supply chains, but the continued war in Ukraine has made that reality even worse.
In a joint statement released after the summit, the Group of Seven said: “Our policy approach shouldn’t be intended to harm China, nor can we seek to frustrate China’s economic progress and development. … At the identical time, we recognize that economic resilience requires risk mitigation and diversification.”
Within the aftermath of the G-7 announcement, China summoned the Japanese ambassador and ordered corporations to stop purchasing from US chip maker Micron.
Giuliano Noci, vice-chancellor of China’s Politecnico di Milano, told CNBC’s Squawk Box Europe on Monday that the G-7 showed “unitarianism” towards China.
“[President Joe] Biden was talking about risk mitigation, not decoupling. Decoupling was the magic word of the US until a month ago, but it is rather clear that given the role played by the Chinese marketplace for several products, given the extent of interconnection between supply chains, decoupling is next to unattainable. said Night.
Risk mitigation refers to easing some dependence on China, not severing the connection altogether.
“It should be clear that isolating China will not only be unattainable on the one hand, but dangerous on the opposite,” Noci said.
The departure from the Biden administration perhaps reflects the conclusion that separating the Chinese economy from China would require enormous effort and economic hardship.
Data from the US Census Bureau showed that the US recorded approx trade deficit in goods with China value about $383 billion in 2022. Data from last yr showed that approx record high in trade between nations and testifies to the issue of separating their economies.
The G-7 leaders went further, expressing their concern concerning the situation within the East China Sea and South China Sea and supporting Taiwan’s “no change” establishment.
“There isn’t a legal basis for China’s expansive maritime claims within the South China Sea, and we oppose China’s military motion within the region,” they said.
Talking to CNBC, Noci said, “we’re moving beyond a unipolar world,” of which the US is the superpower, and we’re entering a bipolar or multipolar world.
British Prime Minister Rishi Sunak said that China is the largest challenge to security and prosperity on the earth. The Chinese Embassy in London described it as “malicious slander disregarding the facts,” reports Reuters.