G7 Summit 2024
What you need to know about the G7 summit in Italy
Washington — The G7 summit in Puglia, Italy, will focus on global challenges such as the Russia-Ukraine war, China’s overcapacity, the situation in the Middle East, and artificial intelligence. Leaders are expected to announce new sanctions against Russia and form a common front to address China’s unfair trade practices. The summit will also address China’s support for Russia’s defense industry and urge Beijing to push Russia to withdraw its troops from Ukraine.
The United States and Europe are concerned about China’s unfair trade practices, particularly industrial overcapacity, and are looking to form a common front to address these challenges. The G7 plans to establish a semiconductor supply chain liaison group to coordinate global efforts in response to the growing importance of semiconductors in the West’s competition with China. The summit is also expected to address the issue of using interest as collateral for a loan to support Ukraine in resisting Russian aggression.
Key Concepts
- The G7 summit 2024 in Puglia, Italy, will focus on global challenges such as the Russia-Ukraine war, China’s overcapacity, the situation in the Middle East, and artificial intelligence.
- Leaders are expected to announce new sanctions against Russia and form a common front to address China’s unfair trade practices.
- China’s support for Russia’s defense industry and the need for Beijing to push Russia to withdraw its troops from Ukraine will be addressed.
- Imposing sanctions on major Chinese banks supporting Russia may lead to Chinese retaliation, but the risk of not taking action is deemed greater.
- The United States and Europe are concerned about China’s unfair trade practices, particularly industrial overcapacity, and are seeking a unified response.
- The G7 plans to establish a semiconductor supply chain liaison group to coordinate global efforts in response to the growing importance of semiconductors in competition with China.
- The G7 is prioritizing support for Ukraine, with plans to provide a $50 billion loan to help resist Russian aggression using interest income from frozen Russian assets.
The Group of Seven Countries G7 Summit 2024 will be held in Puglia, Italy, from Thursday (June 13) to Saturday (June 15). During the summit, leaders from seven major industrialized countries are expected to focus on global challenges such as the Russia-Ukraine war, China’s overcapacity, the situation in the Middle East, and artificial intelligence and announce new sanctions against Russia while working to form a common front to deal with China’s unfair trade practices.
Small Chinese banks warned not to help Russia evade sanctions
Continued support for Ukraine’s resistance to Russian aggression remains the most watched focus of the G7 summit. Leaders of the G7 Summit 2024 will discuss measures to urge China to stop supporting Russia’s military actions.
Bloomberg News reported that a draft statement from the G7 leaders seen by its reporters stated that “China’s ongoing support for Russia’s defense industrial base has important and wide-ranging security implications.” The leaders will also urge Beijing to push Russia from Ukraine withdraws its troops and brokers a just peace.
Bloomberg said the content of the statement could still change before leaders reach an agreement at the summit.
Summit leaders are expected to warn smaller Chinese banks not to help Russia circumvent Western sanctions, Reuters reported. They may issue written warnings to these banks rather than take any immediate sanctions during the summit, such as restricting the use of the SWIFT international clearing system or cutting off their access to the U.S. dollar.
Reuters reported in April this year that major Chinese banks had already curbed their Russia-related transactions due to concerns about sanctions. Sanctioning major Chinese banks could also have huge knock-on effects on the global economy and U.S.-China relations.
“If the warning points to clear, concrete consequences for these banks’ continued support of transactions with Russia, the Chinese government may allow these banks to back down,” said William Reinsch, director of international business research at the Center for Strategic and International Studies (CSIS), a Washington think tank. William Reinsch told VOA, “Chinese banks usually listen to the government.”
Yu Maochun, director of the China Center at the Hudson Institute, a Washington think tank, is not optimistic about the effectiveness of the G7 warning.
“Moral persuasion and expressions of ‘stern warnings’ or ‘serious concerns’, or promises of minor sanctions against minor Chinese entities, will never change China’s behavior,” Yu Maochun told VOA. “What we need is the credibility of the West’s repeated warnings and concerns, which can only be established and maintained through actions, not words, and will impose real reputational and material costs on the perpetrators of misconduct.”
Daniel Fried, a former U.S. assistant secretary of state and former ambassador to Poland, suggested in an article for the Atlantic Council that sanctions on large Chinese financial institutions or institutions that help support Russia could lead to retaliation from China. , but the risk of not taking action is greater. The risk, he said, “is a failure of U.S. and European support for Ukraine and a message that the West does not take its own policies seriously.”
The Biden administration has repeatedly urged China to stop supporting and rebuilding Russia’s defense industrial base and said the United States would be prepared to take further measures if China did not reduce its support for Russia’s defense industrial base, but did not disclose what measures it would take.
President Biden signed an executive order in December allowing the U.S. Treasury Department to punish financial institutions that help Russia evade international sanctions. The United States added China’s Bank of Kunlun to its sanctions list in 2012 due to its business dealings with Iran.
The United States and Europe unite to respond to China’s overcapacity
In addition, China’s unfair trade practices, such as overcapacity in industry, have aroused concerns in Western countries. The United States and Europe hope to form a common front to deal with China’s challenges.
A draft of the leaders’ statement seen by Bloomberg News noted that China’s policies “are producing global spillovers, market distortions, and harmful overcapacity in a range of industries.” The draft also reads, “We do not want to harm China. Or hinder its economic development, in fact, a developing China that abides by international rules is in the global interest.”
At the previous G7 Finance Ministers’ Meeting held in Teresa, Italy, from May 23 to 25, Germany, France and host Italy all called for the establishment of a common front to respond to China’s unfair industrial policies.
U.S. Treasury Secretary Janet Yellen said at the G7 finance ministers’ meeting in late May that she wanted America’s G7 allies to show they stand with Washington. Washington announced a series of import tariffs against China in the previous week, including imposing high tariffs on electric vehicle batteries, computer chips, and medical products.
Many European countries are investigating various Chinese trade practices. The European Commission provisionally determined on Wednesday (June 12) that China’s pure electric vehicle value chain has received unfair subsidies, posing a risk of economic harm to EU pure electric vehicle manufacturers, and announced that it would impose tariffs of up to 38.1% on imported Chinese electric vehicles.
Rui Enshi, director of international business research at the Center for Strategic and International Studies, told VOA that “the consistent message sent by the Group of Seven will have an impact on China.” He said it would show that “despite Russia’s attempts to sow discord, other large economies, especially those in Europe, stand with us and that the US-EU alliance remains intact.”
However, finance ministers from many G7 countries have also warned of the risks of trade wars that may arise from higher tariffs.
French Finance Minister Le Maire said that it is important to avoid a trade war with Beijing. China remains France’s economic partner, but in the face of China’s unfair trade practices, the Group of Seven needs to protect its industrial interests.
German Finance Minister Christian Lindner warned that “you can only lose in a trade war, you cannot win.”
The China Chamber of Commerce to the EU said last month that the Chinese government was considering raising tariffs on some imported cars to 25%.
G7 plans to establish a semiconductor supply chain contact group
According to Bloomberg, leaders of the Group of Seven countries will announce the establishment of a contact group to coordinate the global semiconductor supply chain. Semiconductors have become one of the key industries in the struggle between the West and China.
Since 2022, the United States has implemented a series of semiconductor technology export controls to China, restricting China’s ability to obtain high-end semiconductor products, technologies, equipment, etc. The United States and Europe are working to strengthen domestic semiconductor supply chain security, and Beijing is trying to improve its independent research and development capabilities.
Reuters reported that Washington plans to expand sanctions on the sale of semiconductors and other products to Russia, targeting third-party sellers in China, according to people familiar with the matter.
Continued support for Ukraine remains the top priority
The United States hopes to advance a plan at the G7 summit to use the interest income of 300 billion euros (about 325 billion U.S. dollars) of frozen assets of the Russian Central Bank to provide Ukraine with a 50 billion U.S. dollar loan to support Ukraine in resisting Russian aggression.
White House national security communications adviser John Kirby said Tuesday that the G7 will announce new sanctions and export controls on Russia. “We will announce new measures to unlock the value of frozen Russian sovereign assets to benefit Ukraine and help them recover from the devastation caused by Putin’s forces,” he said.
The idea is to use this interest as collateral for the loan, but there remains controversy over who will issue the debt and a host of technical issues. If approved, the loan could be disbursed as early as the next few months.
During the summit, US President Biden will meet with Ukrainian President Zelensky, who is invited by the host country to attend the summit, and hold a joint press conference on Thursday (June 13) local time.
The G7 includes seven major industrialized countries: the United States, the United Kingdom, Canada, France, Germany, Italy and Japan.