The outcome of the G7 summit gave a boost of diplomatic and military support for Ukrainian President Volodymyr Zelenskyy. While the commendation of the G7 for Ukraine in the communiqué was familiar, the unofficial message is more complicated: as long as it does not take too long. The best way of maintaining western support for Ukraine is to have significant wartime progress. If Kyiv cannot make progress, the country may find it difficult to receive political and financial support from its backers. Moreover, the mounting pressure on the country is related to the US election in 2024, and President Donald Trump’s emergence as the frontrunner increases fears that the next US president will significantly change policy on Ukraine. Consequently, Vladimir Putin has reason to be optimistic that the Trumpist cavalry might appear over the horizon.
The Group of Seven (G7) announced a 1,600-word statement on economic security covering trade-distorting subsidies, cybertheft, and more. The statement indicated the G7 would use early warnings and rapid information sharing and explore "co-ordinated responses" to counter economic coercion, according to the FT's Alan Beattie. However, further action will not be automatic and leaves participating countries to uphold their "respective legal systems" to counter economic coercion. The announcement serves as a rhetorical commitment to support countries affected by coercive trade blockades. Nevertheless, Australia's response to Chinese trade embargoes may be an effective strategy as companies' primary tactic was to adjust and not make noise or show weakness.
The G7 summit held in Japan over the weekend took a unified approach on China's "economic coercion" and reaffirmed commitment to countering Vladimir Putin's aggression in Ukraine. The G7 agreement marks a step forward in providing a coordinated framework to "de-risk" economic relations with China, rather than "decoupling", echoing the calls of European Commission President Ursula von der Leyen. With the G20 summit set to take place in New Delhi later this year, economic ties between developing countries and China and Russia remains a major issue.
The US dollar remains expensive, despite the Fed's interest rate pause in May and possible cuts later this year, according to David Chao, a global market strategist for Invesco. Chao argues that the yuan is the clear challenger to dethrone the US dollar, as past challengers, the Japanese yen and euro, never managed to do so due to the US continuing to outcompete both economies from a macro perspective. Recent events suggest major developing economies are eager to shift away from the US dollar, such as Russia and China trading gas in yuan and roubles.
European Union (EU) member states risk losing the single market bit by bit if they prioritise the pursuit of “strategic autonomy” and economic security over joint policies, says former Italian Prime Minister Mario Monti. He argues that objectives should be more easily achieved through joining forces and warns the single market must be a priority despite the rise of new concerns. Monti also calls for an overhaul of single market rules and the “soft” nationalism of governments, regulators and central banks impeding integration in the banking and capital markets union.
JPMorgan Chase is to spend $15.7bn on new initiatives, including investments in technology, marketing and hiring, according to co-head of the bank’s consumer and community division, Marianne Lake. Her unit is set to spend $7.9bn on new investments, which represents an $800m increase from 2022. The announcement comes on the back of a year in which smaller lenders have faced pressure and represents the latest example of the widening gap between small and large US banks. The wider spending will be $2bn more than the bank spent last year.
The G7 summit sent a message of solidarity against Russia’s aggression towards Ukraine, and now the US, and aligned the EU with US relations towards China. The declaration announced new measures to increase pressure on Russia and support Ukraine’s maximal position in future peace negotiations. The group launched the Co-ordination Platform on Economic Coercion to deter and respond to future economic threats and restrict China’s access to cutting-edge technologies that could be used for military purposes. The Outcome of the G7 meeting greatly complicates China's ability to benefit from economic engagement with the EU over the US, perfectly showcasing their divide and conquer strategy.
Efforts by the Group of Seven (G7) to contain China's growing influence with emerging economies in Africa, Asia, Latin America and the Pacific are unlikely to alter the Global South's deepening economic ties with Beijing or encourage the nations to switch sides, according to former Singaporean diplomat and ex-UN Security Council President Kishore Mahbubani. Despite US attempts to rally countries to the Americans' cause, economic development is the prime concern for most state and ASEAN governments, driving many of them to seek close ties with both the US and China and discouraging them from taking sides, said Mahbubani, now a distinguished fellow at the National University of Singapore’s Asia Research Institute. Europe will continue its strong trade ties with China; developing nations do not want to choose sides; Russia and China are not yet a bloc; and the consequence of the US-China trade war could be severe for many of these emerging nations, Mahbubani said.
