Against the backdrop of the Ukraine crisis and strategic competition between the United States and China, creating a new narrative and formulating new strategies on China and Russia inevitably became the focal points for this year's G7 Summit in Hiroshima.
There seemed to be some conflicting signals. On one hand, the leaders' communique adopted a defensive tone, not an offensive one. It emphasized the group's willingness to establish constructive and stable relations with China, recognizing China's role in the international community and its economic scale. The communique clarified that there is no intention to decouple economically from China and acknowledged the necessity of cooperation in addressing global challenges and common interests.
On the other hand, the communique still sought to provoke China regarding issues such as Taiwan, the East China Sea, South China Sea, Hong Kong, Xinjiang, Tibet and China's nuclear capabilities. It expressed opposition to unilateral changes in the status quo and alluded to the “economic coercion” of China. These statements have elicited strong dissatisfaction and resolute opposition from the Chinese side.
It is not surprising that such contradictory statements appeared, as they reflect the increasingly sophisticated strategies employed by the Western bloc, led by the United States, in its competition with China. They also demonstrate a temporary return of some rational thinking to the competition with China. Short-term detente and long-term competition may shape the future direction of U.S. and certain Western countries' policies toward China.The communique also revealed that the Biden administration still aims to bring the core Western group into the realm of strategic competition against China, even as it acknowledged the complex interplay of other countries' interests. The dualistic language used in the communique regarding China signifies that the U.S. and its allies comprehend the risks associated with deepening economic engagement with China; and yet they also recognize that a complete decoupling from China — the severance of economic ties — is unrealistic.
In the economic sphere, the U.S. encourages other parties to diversify their trade sources, emphasizes the need to enhance supply chain stability, and aligns with Europe's advocacy for “de-risking” rather than the more confrontational approach of decoupling. Regarding investment in China, there are more pronounced divisions within the G7. While the U.S. calls for targeted control of investments in China, Germany, France, and Japan have adopted a more cautious approach, taking into consideration the potential impact on their respective economies.
In an effort to reconcile the conflicting goals of maintaining economic ties with China while simultaneously competing with it, the G7 implemented a range of new measures both within and outside the alliance. Internally, the G7 has evolved into a fresh mechanism and platform for the U.S. to coordinate its allies' policies on China. The aim is to swiftly reach consensus on critical areas such as trade and technology, bolstering the alliance's unity in the face of competition from China.
Externally, the G7 seeks to adopt a more flexible approach by incorporating additional emerging economies, thereby expanding the coalition engaged in competition with China. This involves supporting countries in the Global South through initiatives like infrastructure development and climate change, with the intention of diminishing China's growing influence among emerging economies. Notably, India has emerged as a key focal point of engagement. This stems from India's potential to play a significant role in the U.S.-led Indo-Pacific strategy and its substantial economic prospects, which are capable of driving global economic growth through consumerism, investment and trade. Additionally, the ongoing Ukrainian crisis has impacted Europe's energy dynamics, with India assuming a transit role.
Interestingly, certain statements within the G7 Summit communique regarding China align with the recent signals of moderation conveyed by the Biden administration in the U.S. The future direction of the G7's approach to China will also hinge on the potential opportunities for an improvement in U.S.-China relations. In recent times, various U.S. officials have shared similar sentiments, expressing a desire to strengthen engagement with China, eschew the pursuit of economic decoupling and reduce tensions surrounding potential conflicts in the Taiwan Strait.
America's apparent urgency to “apply the brakes” does not indicate a fundamental reversal in its strategic competition with China but rather a phase of transitional adjustments driven by internal and external factors. From a domestic perspective, the Biden administration faces a limited window of opportunity in U.S.-China relations, though this window is unlikely to remain open for long. As the U.S. approaches the 2024 election cycle, President Joe Biden's position domestically will become more vulnerable, with any policies aimed at easing tensions with China potentially becoming targets of Republican attacks. Without taking substantial action this year, the administration will face a more challenging domestic political environment next year.
On the international front, the U.S. acknowledges the difficulties of achieving a rapid decoupling from China, while also feeling pressure from third parties. After multiple rounds of confrontation and miscalculation, the Biden administration has come to realize just how severe the consequences could be with respect to its competitive approach toward China. Pressuring China in the areas of trade, economics and technology will have significant and irreversible spillover effects, resulting in more unstable global supply chains and detrimental impacts on the interests of the U.S. and its allies.
Moreover, pressure from key third-party actors, such as Europe, has compelled the U.S. to recalibrate its competitive policies. Recent China-EU economic and trade relations have warmed rapidly, encompassing collaboration in high-end manufacturing sectors such as aviation, emerging industries such as renewable energy battery factories and infrastructure projects, such as port development. Europe has consistently opposed the pursuit of a decoupling policy toward China, and the U.S. has gradually adopted the more moderate concept of “de-risking,” as used by its European counterparts. Consequently, Biden, who places greater emphasis on transatlantic relations than his predecessor, is more attuned to European sensitivities and recognizes that a simplistic application of Cold War-era competition with China will not effectively unite America's allies.
The G7 Summit in Hiroshima does not represent a new crossroads in U.S. or Western core group policies toward China. Rather, it signifies the beginning of a new phase in U.S.-led competition. Therefore, the core objectives of the United States have not changed, and it continues to seek to “outcompete” China. However, it also acknowledges that previous competition strategies have proved ineffective and require adjustment. The outcome of any adjustments is uncertain, but one thing is certain: The Biden administration has limited time to act.
