China’s role in providing assistance to Russia in its war against Ukraine, and its “harmful overcapacity” in the production of cheap goods, have been targeted by G7 leaders despite misgivings from Germany.
On the second day of the annual summit, being held in Puglia under the Italian chair, the US drove home a 36-page communique that condemned Chinese subsidies for products such as solar panels and electric cars which it said were leading to “global spillovers, market distortions and harmful overcapacity … undermining our workers, industries, and economic resilience and security”.
US officials were unequivocal in identifying China as a major supplier of dual-use materials – those with civilian and military applications – to Russia that they said Beijing knew were being used against Ukraine. The US officials identified “optics, nitrocellulose, microelectronics, and the sorts of items that go directly to the production of armaments that are used not just in Ukraine but that pose a long-term threat to the security of Europe”.
The US president, Joe Biden, standing alongside his Ukrainian counterpart, Volodymyr Zelenskiy, was blunt about what he said was China’s role in arming Russia. Zelenskiy, by contrast, insisted the Chinese leadership had promised him they were not supplying arms to Moscow.
The US, Japan and the EU – which attends G7 summits as an unofficial eighth partner – have all voiced concern over generous subsidies from Beijing, especially in green energy and technology sectors, resulting in unfairly cheap goods flooding the global market. That excess capacity threatens western companies struggling to compete, particularly in the growing green tech sector.
“We will confront China’s non-market policies that are leading to harmful global spillovers,” John Kirby, the US national security council spokesperson, told journalists before the summit.
A senior Chinese official, the first vice-premier, Ding Xuexiang, will travel to Brussels next week to urge the EU to rethink plans to impose duties of 38% on Chinese electric vehicles on top of the 10% it already charges on all car imports. Germany had been hoping the duty could be reduced before it came into force early in July.
The G7 self-consciously expanded its meeting on Friday to welcome the global south, with arrivals by the Indian prime minister, Narendra Modi, the Turkish president, Recep Tayyip Erdoğan, the United Arab Emirates president Mohamed bin Zayed, the Brazilian president, Luiz Inácio Lula da Silva, and the president of Mauritania, Mohamed Ould Ghazouani. More than 20 world leaders were around the table to hear a speech by Pope Francis on artificial intelligence.
The Italian prime minister and G7 host, Giorgia Meloni, insisted she would never accept the narrative of west against the rest, arguing the only way to meet collective challenges was through co-operation.
Russia, facing wider secondary sanctions, loss of control of its state assets and a new US-Ukraine 10-year security pact, has become the big loser of the summit. A plan announced at the start of the summit for a $50bn (£39.4bn) loan for Ukraine, raised from the profits on the interest accrued from Russian state assets, is intended as only the start of a squeeze on the Russian economy.
The final communique says Russia must end its illegal war of aggression and pay for the damage it has caused to Ukraine, which it says, according to the World Bank, exceeds $486bn. “Russia’s obligations under international law to pay for the damage it is causing are clear, and therefore we continue to consider all possible legal avenues through which Russia is forced to comply with those obligations,” the text says.
Russia has dismissed the US-Ukraine security deal as just “pieces of paper” and derided the appropriation of the profits from its frozen assets as theft.
Although Zelenskiy has been holding back over China, he did urge Modi at a bilateral meeting on the sidelines of the summit to review India’s dependence on Russian oil, especially since the price of these purchases are rising, giving Russia ever higher revenues.
The US and EU imposed a price cap of $60 (£47) per barrel on Russian oil sales, meaning western shippers and insurers can only participate in Russian trade if the oil is sold below the price limit. The communique calls for tighter enforcement of the cap, including action against the Russian “shadow fleet” that is transporting oil above the cap.
India has never been part of this export ban, but the US, worried about an escalation of oil prices in an election year, has been reluctant to put too much pressure on Modi. India became the biggest buyer of Russian seaborne crude ahead of China and Turkey after European refiners stopped imports.