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G-7 leaders consider how to counter China's economic threats

LEILA FADEL, HOST:

President Biden is in Japan for a meeting of the G-7, some of the world's wealthiest nations. High up on the group's agenda is how to tackle China's government's increasing use of economic retaliation against countries that question or challenge its policies. As NPR international affairs correspondent Jackie Northam reports, exactly how the G-7 can counter this so-called economic coercion is yet to be decided.

JACKIE NORTHAM, BYLINE: In late 2020, relations between Australia and China were already deeply strained when Canberra called for an independent inquiry into the origins of COVID. The reaction from China was swift and costly.

WENDY CUTLER: China turned around and restricted imports of a number of Australian products, including barley, wine and coal, and did this even with a free trade agreement with Australia.

FADEL: Wendy Cutler is vice president of the Asia Society Policy Institute and a former negotiator with the Office of the U.S. Trade Representative. She says this is a classic case of China using economic coercion.

CUTLER: This really refers to a practice of China where it imposes restrictions or punishes countries for not aligning with its foreign policy objectives. And it does this in a very nontransparent and very arbitrary manner.

NORTHAM: China's use of economic coercion is increasing, says Bonnie Glaser, the head of the Asia program at the German Marshall Fund.

BONNIE GLASER: We've seen this used against Japan, the Philippines, South Korea, Mongolia, Sweden, Canada, Taiwan. I mean, the list is really very, very long. And so I believe that we have to come up with ways to actually make China pay a price. Otherwise, I think it would be difficult to deter China.

NORTHAM: Josh Lipsky, senior director of the Atlantic Council's GeoEconomics Center, says there isn't consensus yet amongst the G-7 on how to push back against China's use of economic coercion. The U.S. appears to be pushing for a more robust response. Lipsky believes the G-7 could come up with a mechanism to help countries hurt by China.

JOSH LIPSKY: Meaning that let's say China were to target a particular country, whether in the G-7 or not in the G-7. There would be a sort of coordinating body that would say we need to act in unison on this issue and make sure that we provide economic aid to this country together and we don't undercut each other.

NORTHAM: Former trade negotiator Cutler says that mechanism could help small and medium-sized countries that China targets.

CUTLER: And those countries are often reluctant to make a big deal of it or to take China on in fear of retribution and escalation and even being subject to even more retaliatory measures. And so if a country then feels that it has the support of a larger group of countries, it may be more willing to call China out.

NORTHAM: China says it's hypocritical to call it out for economic coercion, given the fact that the U.S. has placed tariffs on Chinese goods and sanctioned thousands of individuals and entities around the world. The German Marshall Fund's Glaser doesn't buy that.

GLASER: At least we are imposing sanctions based on our own legal processes, our own regulatory systems. We do it in a transparent, candid way. In the case of China, they are completely opaque. They have never admitted that they have taken any of these coercive measures.

NORTHAM: There's no guarantee the G-7 will reach a consensus on China's use of economic coercion by the time the summit in Japan wraps up Sunday.

Jackie Northam, NPR News.

(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.

Jackie Northam is NPR's International Affairs Correspondent. She is a veteran journalist who has spent three decades reporting on conflict, geopolitics, and life across the globe - from the mountains of Afghanistan and the desert sands of Saudi Arabia, to the gritty prison camp at Guantanamo Bay and the pristine beauty of the Arctic.