HIROSHIMA: Historian Niall Ferguson argues that the icy bi-lateral relations between the US and China in recent years have evolved into a new and dangerous conflict, what he calls Cold War II.
Looking at what went on at the Hiroshima meeting of the Group of Seven countries (Western Europe, the US, Canada, and Japan), there is evidence that Ferguson is on to something. The principal focus was the war in Ukraine with G7 leaders expressing complete solidarity with President Volodymyr Zelenskyy. They agreed to supply Kiev with advanced war planes and tightened already stringent economic and financial sanctions against Russia.
G7 leaders then turned their attention to China, using unusually forceful language to castigate several elements of Chinese conduct.
Insisted
They insisted that China “press Russia to stop its military aggression, and completely and unconditionally withdraw its troops from Ukraine.” On overseas spying and data collection, “we call on China not to conduct interference activities aimed at undermining the safety and security of our communities.” They urged restraint concerning Taiwan and reprimanded Beijing for “non-market policies and practices, which distort the global economy.”
Finally, they signaled that Europe and Japan will follow Washington in limiting private sector investment in Chinese tech companies linked to the ruling Chinese Communist Party. The export of equipment for producing advanced semiconductors is being curtailed.
G7 nations insist their strategy is not aimed at containing China or undermining its prosperity. They emphasized that they’re not “decoupling” their economies from China but rather “de-risking,” which they said means diversifying supply chains and minimising economic dependence.
In short, the Americans, Europeans, and Japanese want it both ways—maintaining valuable trade links with China while hammering Beijing on economic coercion and military expansion.
Will this approach succeed? Only time will tell. But the G7 message provoked hostile responses from both Beijing and Moscow. In Beijing the Japanese ambassador was summoned with the foreign ministry accusing Japan of interfering in Chinese internal affairs. Official media said the G7 “descended into an anti-China workshop,” with calls for confrontation. In Moscow Russian Foreign Minister Sergey Lavrov said the G7 wants to defeat Russia on the battlefield and contain both Russia and China.
Business side
The business side of this strategic equation is not to be minimized. G7 countries do a huge volume of trade with China. In the case of the United States, despite Covid and sanctions under Presidents Trump and Biden, US trade with China in 2022 reached record levels, $690 billion dollars. The trade is massively in China’s favor as US imports from China are nearly three times bigger than exports. For Japan, China is its largest trading partner while Europe is also heavily trading with China.
Significantly, while the G7 met in Hiroshima, China was talking trade and development in Central Asia. Literally at the same time as the G7, President Xi Jinping was holding a China-Central Asia summit in Xian in north-central China. His guests were the leaders of five resource-rich former Soviet states—Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan. Xi promised increased trade and investment with this vast region that was formerly reliant on Russia. He spoke of $3.5 billion of financing for railways and pipelines. Central Asia, he said, will be more than just a transport hub along a new Silk Road linking China and Europe.
Sanctions
Western sanctions have brought Russia and China into a closer partnership. With Western European energy markets closed because of sanctions, Russia has boosted oil and gas sales to India and China. Those sales are increasingly being denominated not in dollars but Chinese renminbi. With Russia’s hard currency reserves frozen by G7 countries, Russia has joined others in seeking an alternative to the dollar as a global currency.
The Hiroshima G7 summit revealed a widening gulf in global affairs. On one side is Europe, America and Japan, on the other Russia and China. Dozens of other important countries are in the middle. There is accelerating competition for global leadership both military and economic. It may not yet be a new cold war but it is moving in that direction.
The views of the writer are not necessarily the views of the Daily Friend or the IRR
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