G7 leaders yesterday turned their attention to China on the second day of a summit in Italy, with a focus on how to protect their industries while avoiding an outright trade war with Beijing.
Fair trade with the world’s second-largest economy, notably on green technology, was to be discussed by US President Joe Biden and the leaders of Japan, France, Germany, Italy, Canada and the UK in Puglia.
The G7 rich democracies would also be seeking a common response to China’s alleged support of Russia’s military expansion, which Washington says is fueling the war in Ukraine.
Photo: AFP
“G7 countries are on the same page vis-a-vis China,” a Japanese government source said.
The meeting came amid souring trade relations between China and the West, exemplified by the EU’s announcement this week of plans to impose new tariffs on Chinese electric vehicles.
The US, Japan and the EU — which attends G7 summits as an unofficial eighth partner — have all voiced concern over China’s so-called “industrial overcapacity.”
They say generous subsidies by Beijing, particularly in the green energy and technology sectors such as solar panels and electric vehicles, result in unfairly cheap goods flooding the global market.
That excess capacity threatens Western companies struggling to compete, particularly in the growing green technology sector.
“We will confront China’s non-market policies that are leading to harmful global spillovers,” US National Security Council spokesman John Kirby told journalists ahead of the summit.
China has dismissed the concerns, but Washington is pressing for a united G7 front.
The group’s finance ministers last month warned that they would weigh steps to “ensure a level playing field” for all nations.
On the eve of the summit at the luxury Borgo Egnazia resort, the EU threatened to hit imports of Chinese electric vehicles with tariffs of up to 38 percent beginning next month.
Beijing denounced what it called “naked protectionist behavior” and said it reserved the right to file a suit with the WTO.
The US hiked tariffs last month on Chinese green technology imports, including a 100 percent tariff on electric vehicles, with Biden blasting “cheating” on Beijing’s part.
Another focus yesterday was China’s restrictions on exports of minerals such as gallium, germanium and graphite, which are critical in industries such as telecommunications and electric vehicles.
The curbs threaten international supply chains and there are fears they could be followed by restrictions on other materials, such as rare earth elements needed in electronics.
Analysts have warned of near-term supply shortages and higher prices if China were to further restrict exports, even as the US and other nations are seeking to diversify their supplies, including by boosting domestic production.
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