glacial relationships

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By NOURIEL ROUBINI*

The G7 meeting made it clear that the US and its allies intend to join forces to fight China.

The G7 countries, at their recent summit in Hiroshima, may have tried to deter China without effectively entering a new cold war, but from Beijing's perspective, they failed. It is now clear to all that the United States, its allies, and whatever partners it can recruit are committed to containing China's rise.

After the G7 summit last May, US President Joe Biden said he expects a “thaw” in relations with China. However, despite some recent official bilateral meetings – with US Treasury Secretary Janet Yellen expressing hopes for a visit to China soon – relations remain icy, increasingly icy.

In fact, far from thawing, the new cold war is getting more and more glacial. The G7 summit itself has amplified Chinese concerns about the United States, as it appears to see that they will pursue a strategy of "comprehensive containment, encirclement and suppression". Unlike previous meetings, when G7 leaders offered mostly talk and little action, this summit turned out to be one of the most important in the group's history. The US, Japan, Europe and their friends and allies have made it clearer than ever that they intend to join forces to fight China.

In addition, Japan (which currently holds the group's rotating presidency) was keen to invite top leaders from the Global South, including Indian Prime Minister Narendra Modi. By reaching out to emerging and middle powers, the G7 wants to persuade others to join its response as more muscle to China's rise. Many would likely agree to see China as an authoritarian, state capitalist power that is increasingly assertive in power projection in Asia and globally.

While India (which holds the presidency of this year's G20) has taken a neutral stance on Russia's war in Ukraine, it has long been locked in competition with China. This strategic rivalry is due, in part, to the fact that the two countries share a long border, much of which is in dispute. Thus, even if India does not become a formal ally of Western countries, it will continue to position itself as an independent and rising global power, whose interests are more aligned with the West than with China and China's de facto allies (Russia , Iran, North Korea and Pakistan).

Furthermore, India is a formal member of QUAD – Quadrilateral Security Dialogue –, a security group formed by India, the US, Japan and Australia whose explicit purpose is to deter China; and Japan and India have long-standing friendly relations and a shared history of adversarial relations with China.

Japan also invited Indonesia, South Korea (with which it is seeking a diplomatic thaw, driven by common concerns with China), Brazil (another major power in the Global South), African Union President Azali Assoumani, and Ukrainian President Volodymyr Zelensky. The message was clear: “boundless” Sino-Russian friendship will have serious consequences for how other powers perceive China.

But going even further, the G7 devoted a substantial part of its final communique to explaining how it will confront and deter China in the coming years. Among other things, the document criticizes Chinese policies of “economic coercion” and highlights the importance of an Indo-Pacific partnership in thwarting China's efforts to dominate Asia. It criticizes Chinese expansionism in the East and South China Seas and includes a clear warning to China not to attack or invade Taiwan.

By taking steps to “broken” their relations with China, Western leaders have established language that is only slightly less aggressive than “decoupling”. But more than that, the diplomatic nomenclature has changed. According to the statement, Western containment efforts will be accompanied by a policy to engage the Global South with large investments in the clean energy transition, so that key countries are not drawn into China's sphere of influence.

No wonder China has been unable to contain its fury against the G7. In addition to overlapping with a QUAD meeting, the Hiroshima summit comes at a time when NATO has begun its own pivot to Asia. Behold, the alliance composed of Australia, United Kingdom and USA is preparing to face China in the Pacific.

Meanwhile, the technological and economic war between Westerners and Chinese continues to escalate. Japan is imposing restrictions on semiconductor exports to China that are no less draconian than those implemented by the US; moreover, the Biden administration is pressuring Taiwan and South Korea to follow suit. In response, China has banned chips made by US-based Micron.

With US chipmaker Nvidia fast becoming a corporate superpower – due to growing demand for its advanced chips to power AI applications – it will also likely face further restrictions on selling to China. US policymakers have made it clear that they intend to keep China at least a generation behind in the race for AI supremacy. Last year, theChips and Science Act” introduced massive incentives for the resumption of chip production in North American territory.

The risk now is that China, striving to close its technology gap with the West, will leverage its dominant role in the production and refining of rare earth metals – which are crucial to the green transition – to retaliate against sanctions and trade restrictions. from the USA. China has already increased its electric vehicle exports by nearly 700% since 2019, and is now starting to deploy commercial planes to compete with Boeing and Airbus.

So while the G7 may have set out to deter China without escalating the Cold War, the perception in Beijing suggests that Western leaders have failed to achieve their goals. It is now clearer than ever that the US and the West at large are committed to containing China's rise.

Of course, the Chinese would like to forget that today's escalation owes as much, if not more, to their own aggressive policies toward US strategies. In recent interviews marking his 100th anniversary, Henry Kissinger – the architect of “America's opening to China” in 1972 – warned that unless the two countries find a new strategic understanding, they will remain on a collision course. The deeper the frostbite, the greater the risk of a violent crack.

* Nouriel Roubini is professor of economics at the Stern School of Business at New York University. Author, among other books, of MegaThreats: ten dangerous trends that imperil our future (Little, Brown and Company).

Translation: Eleutério FS Prado.

Originally published on the portal Project syndicate.

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