June should have seen the United States host the 46th G7 summit which brings together the leaders of the top 7 industrialized nations of the world. As Covid19 continues to spread the in-person meeting was changed to a video gathering but then President Trump decided he wanted a physical meeting after all. Germany’s Angela Merkel declined the in-person invitation which lead to the eventual postponement of the event till September.
The meeting was mired in controversy as Trump initially planned to hold it at one of his own golf resorts although he later changed the venue to Camp David or the White House. Even his desire for an in-person meeting was seen more as an attempt to win political points as he moved to re-open America and show everything was back to normal rather than as a effort to truly enhance the dialogue.
Yet for all President Trump’s faults, and there are many, he is prepared to say what others will not and in doing so cuts right to the heart of the matter. He wholly fails to consider further steps and frame a meaningful policy, but his outspoken style can ring true at times.
As part of the preparations for the meeting President Trump said,
“I don’t feel that as a G7 it properly represents what’s going on in the world. It’s a very outdated group of countries.”
He is certainly correct with the first sentence, less so with the second. He therefore extended invites to five other countries, India, Brazil, Russia, South Korea and Australia. When the meeting will take place or who will eventually attend is still not known but a review of the table clearly shows why those countries were invited. The table presents nominal GDP sizes as per IMF data from late last year. Since the pandemic all those nominal GDP numbers have had a severe knock downwards.
|Rank||Country||Nominal GDP, USD Trillions||G7 Member||G11/2 Invite|
The original G7 is clearly very North Atlantic focused, plus Japan of course, but that fails to capture what has happened in Asia and Latin America over the past few decades. Bringing in India and Brazil seems only fair as they are both larger economies than Canada. South Korea’s inclusion would certainly reflect the development of Asia and not only in terms of GDP. South Korea is a country which not only has a modern first world economy but has handled the pandemic extremely well and is now competing globally in terms of soft power as its TV drama shows, films and pop-music attract audiences and win awards around the global.
Not that Trump’s invitations were wholly supported. There was pushback from European members at Trump’s unilateral moves to reshape the G7, and very specifically against the Russian invitation. Since Russia invaded the Crimea in 2014 the EU and the US have imposed sanctions on the country and kept Russia at arm’s length in the global political theatre although Trump’s personal admiration of Russia’s Vladimir Putin and his continuing engagement with Russia certainly worries both the EU and many within the broader US political and diplomatic sphere.
Some in Europe have an almost knee-jerk aversion to Trump. They cannot get past his mix of ignorance and arrogance; they want him to be something else and because of that inherent dislike the default reaction is to reject whatever he proposes. And while expansion of the group may make sense to be more representative of the world why stop with these countries? Where is the Muslim world represented? India may have the world’s third largest Muslim population after Indonesia and Pakistan, yet no one would think it can properly speak to Muslim’s concerns. Nor is a sole country from Central and South America presentative, and the glaring gap is of course that no African country is mentioned at all. Nigeria, Africa’s largest economy does not even make it into the top 20 of global economies.
Of course there already exists the broader G20 grouping of countries and supranational bodies like the World Bank, the African Union and ASEAN where there is broader participation from the Americas, Africa and Asia but the G20 body by virtue of size starts to become too large and too diverse to make a meaningful impact, if indeed any of these bodies do. Many of these groupings are already seen as largely impotent talking shops, expanding the membership only reinforces that view.
The enlarged grouping was not unrealistically seen as an being an “anti-China forum”. China is the world’s second largest economy by some measure and even with inflated Chinese growth rates or a sharp knock down from Covid19 that reality is not going to change. To have such a global body of large nations without China is by default a challenge to China. Russia explicitly stated that it had no interest to joining such an anti-China league so at best Trump’s plan of a G12 is only a G11.
But Russia is not alone, most if not all these countries are not looking to make enemies of China. They certainly do not want to sign up to a Trump led crusade against China and its companies. Almost all the proposed G12 members have issues with China though. Just going down the list is instructive. The US issues with China need no introduction, Japan and China have long running tensions dating back decades, Germany has slowly woken up to the very unlevel economic playing field with China especially when it comes to Chinese buying of Germany hi-tech manufacturers. In the case of India, the brutal arm to arm fighting high in the Himalayas resulting in dozens of dead on both sides has completely derailed the growing engagement of the two countries. The UK has finally figured out that their “Golden Era” of relations with China was nothing of the sort and that they will have to rethink their ongoing engagement. China is holding two Canadians hostage after the arrest and detention of Meng Wenzhou and its brazen offer to exchanges prisoners only shows the contempt they hold for law in Canada and in their own country. Russia and South Korea in spite of all their bilateral trade with China certainly remain wary of their giant neighbour and Australia is seeing its exports targeted by China in response to Australian calls for transparency and openness regarding the Covid19 outbreak. All said and done this group is already at loggerheads with China. It would seem an ideal anti-China group.
But outside of erratic calls from President Trump none of these countries are looking to fully decouple with China. All benefit in some way from trade and investment with China, and all want that to continue. What they will not accept any longer is the abuse and distortion of trade rules and the protectionist measures which China has employed over the past two decades. They will no longer be quiet as China bullies it neighbours in the South China Sea and militarizes islands which it has no legal claim to. They no longer accept interference in their own domestic politics by China whose goal is to frame every criticism of Chinese actions as an insult to the Chinese people which risks the entire bilateral relationship. They will no longer accept a China which promises one thing yet delivers another. Just this week the EU, which held a virtual summit with China, admonished China for a list of failings from Hong Kong to trade and market reciprocity. There is plenty common cause between all these countries but what is lacking is leadership and strategy, and that can only come from the United States. Its economic clout dwarfs all the other countries and still leads China in a slew of economic and development indicators.
President Trumps ignorance and arrogance certainly turns off many around the globe but ultimately it his completely failure to formulate meaningful long-term strategy and the associated policies which undermines any willingness to sign up to some tweeted course of action. Even if such strategy was suggested no one believes that Trump will have the focus and discipline to carry the policy forward. Whether it be the recent revelations in former National Security Advisor John Bolton’s book, or the previous Ukraine investigations, it is clear that Trump will always put his own affairs and the ability to get reelected before the needs of the country. According to Bolton Trump practically pleaded with Xi to help him get reelected by buying more agricultural products to shore up his vote in those states. How can any of those other G12 countries look to Trump for leadership when they could be undercut by him at a moment’s notice. A late-night tweet could unravel weeks of negotiation if Trump thought his opinion poll numbers slipping.
Ironically such a grouping of like-minded countries, whether it be an expanded G7 or not, was exactly what the United States should have been able to form if it wanted to meaningfully look to change Chinese policy and practice. No one should think that pushing back on China’s overreach will be a short term or easy process. It certainly was not going to come from a single trade deal or even from a series of them. It would require coordinated actions and measures which could be calibrated across a range of issues.
Even though Trump has tried, and will almost certainly fail, to bring the G11 or G12 about, he has himself undercut any possible co-ordination by picking fights with many of the individual countries. The EU is heading towards a trade war with Trump over a cars and digital services. Japan and South Korea have already attracted his attention on trade and tariffs. He has upset the Germans with his remarks around NATO and has even been able to pick a fight with the Canadians. Only the Russians have escaped his outrage. With Britain’s departure from the EU trade tensions between the UK and, France, Germany and Italy are only going to increase as a trade deal and “divorce settlement” are painfully negotiated. In summary this grouping will have plenty to fight about amongst themselves before they can co-ordinate policy on China.
President Trump has changed the conversation and interaction around China, that was long overdue, and was an essential first step but he has alienated all his natural allies when it comes to pushing back against China. The first goal of his Presidency, and perhaps his only major achievement, was his tax cuts but cementing alliances and reaching out to others should have been the plan when it came to responding to China. Instead he belittled friends and allies while pursuing not an American First policy but an American Only policy.
Global leadership is vitally important at the current time. The health implications of the pandemic and the severe economic downturn which has come in its wake can only be addressed by coordinated policy action. The G7 plays a key role in helping set that policy direction and it is important that its September meeting can go forward. But even for those countries interesting in a G12 the key change needs to come from US policy. There are many talented individuals within the US political and government system who are keen to work with historical allies and craft meaningful and effective policy towards China. Those good people on all sides appreciate that opportunity and time is being wasted. It is not that China has better ideas and strategies which appeal to others around the globe but as the many of the world’s leading nations bicker and fail to show vision and leadership China will continue to expand its presence where it can.
Privatizing China: Inside China's Stock Markets
by Fraser J. T. Howie (Author), Carl E. Walter (Contributor)
Red Capitalism: The Fragile Financial Foundation of China's Extraordinary Rise
by Carl Walter (Author), Fraser Howie (Author)
- To keep peace Japan must cross the nuclear threshold
- Europe looks on at the CCP at 100