Newsletter 165 - May 21, 2023
Welcome to the 165th edition of Trade War.
The G7 in Hiroshima calls for action against economic coercion, without naming China. Xi meets with Central Asian leaders in Xian, reinforcing ties with the region, while warning against “color revolutions.”
A new Chinese ‘securocrat’ is in charge of investigations of foreign companies. And China hawk Mike Gallagher spooks U.S. firms at home.
Latest indicators suggest China facing an economy ‘confidence trap’ while IPOs on Chinese markets soar past those in the U.S.
Montana becomes first state to ban TikTok. Drugmaker Astra Zeneca China chief says goal is to ‘love the Communist Party.’ And new DOJ indictment may reveal details on CCP operations in the U.S.
And Two Takes on Taiwan and TSMC
“I don’t like its location” - Warren Buffett, Berkshire Hathaway
“If Taiwan were taken out, we would be like severing our brain” - John Rutledge, Safanad
Don’t settle for the abridged version. Become a paid subscriber to Trade War and get the full scoop on China every week.
G7 calls for action against 'economic coercion’
At the G7 meeting in Hiroshima, Japan, leaders of the world’s top economies put out a strong statement against economic coercion, but without naming China, reports the South China Morning Post’s Josephine Ma.
Leaders from the Group of Seven which includes Canada, Australia, Japan, Britain, France, Germany, Italy, and the United States cited a “disturbing rise” in economic coercion that aims to “exploit economic vulnerabilities and dependencies” and “[undermines] the foreign and domestic policies and positions of G7 members” and other countries.
“Attempts to weaponize economic dependencies by forcing G7 members and our partners, including small economies, to comply and conform will fail and face consequences,” the group said.
The G7 also called for the creation of a “Coordination Platform on Economic Coercion” which will see member countries rapidly share information when incidents occur and work together to respond, including by supporting countries facing economic coercion.
While the platform is an “important process step forward,” it is “unfortunate that specific collective actions [were] not laid out,” said Wendy Cutler, vice president at the Asia Society Policy Institute and a former U.S. trade official, in a tweet.
Since the beginning of 2020, China has used economic coercion 73 times against 19 countries, according to a new report from the Australian Strategic Policy Institute called “Countering China’s Coercive Diplomacy.” (pdf)
Prominent examples of China’s use of economic coercion in recent years include Beijing retaliating against Lithuania after at it allowed Taiwan to open a representative office, sanctioning Australian imports after Canberra called for an investigation into the origins of Covid, and actions against South Korea when it agreed to host a U.S. anti-missile system, and targeting Japan over territorial disputes.
The broader G7 communique, by contrast, mentioned China by name, criticizing its “non-market policies and practices” that “distort the global economy,” and vowing to “counter malign practices, such as illegitimate technology transfer or data disclosure.”
Here is the G7 Leaders’ Statement on Economic Resilience and Economic Security as well as the full text of the G7 communique.
The US is the ‘real coercer’
Not surprisingly, Beijing lashed back, calling the U.S. the “real coercer.” Here are some choice comments on the G7 meeting from China’s foreign ministry below:
Keep reading with a 7-day free trial
Subscribe to Trade War to keep reading this post and get 7 days of free access to the full post archives.