CNN Meanwhile In China : G7 leaders gather on Beijing's doorstep to seek unified response to its threat, Xi's Central Asia outreach, Business of China and more

 

Nectar Gan   G7 leaders gather on Beijing’s doorstep to seek unified response to its threat

As leaders of seven of the world’s most powerful democracies gather in Japan on Friday, it will be the authoritarian powers of China and Russia that dominate the agenda.   The annual Group of Seven (G7) summit, convening this year in Hiroshima, will seek to project a unified response to an increasingly assertive China – and the perceived threat it poses to the stability and economic security of a world already shaken by Russia’s ongoing war on Ukraine.   While much of the attention will be focused on Ukraine – including how to further tighten the screws on Russia and defuse rising nuclear tensions – the three-day summit also provides an opportunity for G7 leaders to recalibrate and coordinate their approach toward China, which has refused to condemn the invasion and instead bolstered ties with Moscow.   “Basically this is going to be a meeting for them to talk about how to deal with China and Russia,” said Yasuhiro Matsuda, an international relations professor at the University of Tokyo.   But agreeing on a common approach to the world’s second-largest economy will not be an easy task.   China, a global manufacturing hub and a huge consumer market, is an important trade partner to the G7 countries – the United States, Japan, Germany, the United Kingdom, France, Canada and Italy.   “It is difficult to have one single position on China across seven countries considering their different concerns and relationships with Beijing,” said Sun Yun, director of the China Program at the Washington-based Stimson Center think tank.   “But to the extent that a position with the largest common denominator can be developed, the G7 offers a great opportunity.”   Security in Asia   Projecting unity on China comes at a crucial moment for the US and its allies, as Beijing ramps up diplomatic efforts to repair ties with Europe and drive a wedge in the transatlantic alliance.   Last month, French President Emmanuel Macron caused consternation in Western capitals after he said, following a warm visit to Beijing, that Europe must not become “just America’s followers” and get “caught up in crises that are not ours” when asked about the prospect of China invading Taiwan.   Days later, in an effort to present a united front on Taiwan, the G7 foreign ministers said in a preparatory meeting for the summit that there was “no change” in the bloc’s position on the self-ruled democratic island,  which the Chinese Communist Party claims sovereignty over despite never having controlled it.   The top diplomats called on China to “abstain from threats, coercion, intimidation, or the use of force” and “reaffirmed” the importance of “peace and stability” across the Taiwan Strait as an “indispensable element in security and prosperity in the international community.”   Japan, the host of this year’s G7 summit and its only Asian member, will position regional security on the summit’s main agenda, said Matsuda at the University of Tokyo.   Deeply concerned about Beijing’s military posturing in the region, Japanese Prime Minister Fumio Kishida has warned publicly that “Ukraine today may be East Asia tomorrow.”   In response to growing threats from China, Japan has moved to double its military spending and is in talks to open a NATO liaison office – the first of its kind in Asia and a sign of deepening ties between Western and Asian democracies.   In a move that highlighted Tokyo’s concerns, China sent a naval flotilla – led by one of its most powerful destroyers – on a 12-day circumnavigation of Japan’s main islands in a display of military power in the lead-up to the G7 summit.   ‘Economic coercion’   Another important theme of the summit will be economic security, including how to counter China’s economic pressure tactics.   At a meeting of G7 finance ministers in Japan last week, US Treasury secretary Janet Yellen called for “coordinated action” by G7 nations against Beijing’s use of “economic coercion.”   The tough rhetoric was echoed by European Commission President Ursula von der Leyen this week before she departed for Hiroshima.   “We’ve seen attempts of economic coercion, for example China towards Lithuania; we’ve seen similar practices vis-a-vis Japan and Australia,” von der Leyen said in Brussels Monday, citing Beijing’s recent punishment of the Baltic state for opening a new trade office with Taiwan.   “We are most vulnerable to coercion in general where dependencies built up,” she said, calling for the “de-risking, not decoupling” of economic relationships with China.   Read the full story here.

Nectar Gan is China Reporter for CNN International in Hong Kong. She covers the changes taking place in China, and their impact on the world.

Xi's Central Asia outreach China is ready to help Central Asian countries enhance their law enforcement, security and defense capabilities, leader Xi Jinping said Friday, according to state broadcaster CCTV.      Xi addressed his message to leaders of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan, who joined him for a summit this week in Xi'an -- the central Chinese city that was once an outpost on the region's ancient Silk Road.   The two-day gathering was the first in-person meeting of the heads of state together with China since they established diplomatic relations after the fall of the Soviet Union, according to China’s state media. It comes as the region grapples with the knock-on economic effects of neighboring Russia’s war in Ukraine.   Xi also called for broadening of cooperation in areas including trade, transport, energy and employment, pledging that China will bring about more trade facilitation measures and upgrade bilateral investment agreements.

Until a few weeks ago, Chinese shares were among the best-performing in the world over the previous six months as investors bet on the country’s economic recovery after the lifting of pandemic restrictions.   But since April 18, when China released figures on its first-quarter economic output, stocks of Chinese companies around the world have lost about $540 billion in value, according to CNN calculations. Investors trimmed their exposure to China amid economic uncertainty in the country, rising geopolitical tensions and Beijing’s crackdown on international consulting firms.   The Nasdaq Golden Dragon China Index has lost more than 5% since April 18. Hong Kong’s Hang Seng Index has also shed 5%. And the Shanghai Composite Index and the Shenzhen Component Index have fallen 3% and 6.5% respectively. During the same period, the Nasdaq Composite jumped 4%.   The selling is not limited to equities. The Chinese yuan, a barometer of investor sentiment, has tumbled over 2% in the past month. On Wednesday, the yuan sank below 7 to the US dollar in offshore trading, breaching that key level for the first time this year. The currency weakened further on Friday, hitting its lowest level in nearly six months.   “Investors remain skeptical [about China] for two primary reasons. First, the recovery has not been robust,” said Brock Silvers, chief investment officer for Hong Kong-based Kaiyuan Capital.   Another concern for global investors is the country’s “fundamental investability,” he said, referring to geopolitical and Chinese policy risks.   Relations between the United States and China have become increasingly tense over the past few months. Washington has ramped up sanctions against key Chinese industries, including chipmaking. Beijing has displayed a growing distrust of foreign companies, cracking down on international consultancies and expanding the country’s counter-espionage law last month.   “Unfortunately after two decades of mutual benefit, global tensions have risen between China and the US,” said Michael Kelly, global head of multi-asset at PineBridge Investments, a New York-based asset management firm.   Patchy recovery   Chinese stocks began a sharp rally in late October on hopes that the country would exit its costly zero-Covid policy. In early December, Beijing ditched the stringent restrictions, which resulted in a quick rebound in economic activity.   But despite solid consumption-led growth of 4.5% in the first quarter, recent economic data point to an uneven recovery in the world’s second-largest economy.   On Tuesday, China released a batch of economic data for April, which largely disappointed investors. Nomura and Barclays lowered their forecasts to 5.5% and 5.3%, respectively, after the data release. But UBS and Goldman Sachs maintained their growth projections, which are 5.7% and 6% for the year.   The consumer price index rose by just 0.1% in April, the slowest pace in more than two years. The producer price index, which measures factory-gate prices, declined by 3.6%, marking the biggest contraction in three years, and underscoring the risk of deflation.   Imports plunged 7.9% in April, reinforcing signs of feeble domestic demand. As for employment, the jobless rate for 16- to 24-year-olds hit a record high of 20.4% in April.   China’s “faltering” real estate sector, formerly the economy’s main driver, remains a major worry, said Silvers. Over the past few decades, the sector has accounted for as much as 30% of China’s GDP.   Read the full story here.

Laura He is a reporter and digital producer for CNN Business. She covers news about Asian business and markets from Hong Kong.

Around the region US President Joe Biden and fellow world leaders were unveiling tough new sanctions on Russia as they prepared to hear from Ukrainian leader Volodymyr Zelensky in-person later this weekend at the G7 summit in Hiroshima, Japan. Homicide detectives in Australia are investigating why a police officer felt so threatened by a 95-year-old woman clutching a walking aid and steak knife that he needed to Taser her inside her nursing home. Myanmar’s ruling military junta has imported at least $1 billion in weapons and military-related equipment since its bloody coup, with much of it coming from Russia, China and Singapore, a new United Nations report said. Warren Buffett’s conglomerate has sold its remaining shares in the world’s largest chipmaker, TSMC, after the “Oracle of Omaha” sounded alarms about its homebase of Taiwan.