(Bloomberg) -- When the diplomatic emissaries of the Group of Seven nations met virtually late last month to prepare the ground for the leaders summit in June, one problem cropped up over and over again: what to do about China?
Over three days of video conferencing for their second so-called sherpa meeting, officials from the U.S., the U.K., Canada, Japan and their European partners discussed topics ranging from human rights and international development to trade and climate change, according to a diplomat’s account of the meeting. China was a factor in many of the conversations.
With Beijing viewed in different contexts as either partner, competitor or adversary -- or some combination of these -- one participant summarized the challenge as finding a common position over how to relate to the world’s second-biggest economy, the diplomat said. Another emphasized that establishing a shared perspective is important because competition with Beijing will shape geopolitics for generations to come.
Some European government officials have warned of the danger the G-7 comes to be seen as an anti-China alliance, especially with U.K. Prime Minister Boris Johnson inviting India, Australia and South Korea, all of which have a level of friction with Beijing, to this year’s meeting. Chinese officials have claimed the same, saying Beijing is being unfairly targeted as its economic and strategic clout grows.
But the tensions between Beijing’s approach and the democratic values underpinning the G-7 are becoming increasingly hard to gloss over, with international scrutiny trained on the treatment of the Uyghur minority in China’s northwest and the crackdown on the pro-democracy movement in Hong Kong.
So this year’s talks, like much of the international agenda, are set to be defined by the one major power not at the table.
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A spokesman for the British government, which holds the G-7 presidency this year, said the sherpas’ meeting covered an array of topics from the Covid pandemic and future health threats to gender equality and climate action. A North American official described China as an overarching issue that touches many of the topics discussed.
One subject that highlighted the fault lines over China was the “open societies statement,” which the U.K. hopes will be one of the key outcomes of the leaders’ summit in Cornwall, England.
The U.S., the U.K., Canada and Japan see the document as an opportunity to address explicitly what they view as uneven competition between democracies and non-democratic regimes, the diplomat with knowledge of the talks said. Germany, France and Italy were concerned that such language would be seen as overtly antagonizing in Beijing and wanted instead to praise the merits of democracy while also maintaining a constructive attitude toward China.
“The majority would be in the direction of expressing more concern about China,” Kunihiko Miyake, a former Japanese diplomat and now adviser to Prime Minister Yoshihide Suga’s cabinet, said in an interview. “We are somewhere in the middle,” said Miyake, who is not directly involved in the G-7 talks.
With South Africa also invited to certain sessions alongside the representatives from Seoul, Canberra and New Delhi, some of the wider group also want to see a reference to tensions in the Indo-Pacific region, where China has been involved in border scuffles with India, disputes over reefs in the South China Sea, imposed tariffs on Australian goods and flown military aircraft close to Taiwan. South Korea had reservations about that.
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The dilemma is particularly acute for Italy, which is hosting this year’s meeting of the Group of 20 nations in October and is trying to put together an agenda that will include China. But all the European members consider it a tricky balancing act.
Am investment pact between the European Union and China sealed last year is hanging by a thread following Beijing’s response to human rights sanctions targeting Chinese individuals and entities over alleged abuses of Uyghur Muslims in Xinjiang. Beijing retaliated by imposing punitive measures on a number of European parliamentarians. An EU official involved in negotiating the agreement said it had little chance of being ratified until China lifts those sanctions.
The EU has also struggled to maintain a united front over China, with several member states, such as Hungary, buying vaccines from Beijing without it being approved by the European regulator. Hungary more recently announced it would become the first EU country to host a Chinese university campus and criticized the decision to sanction Beijing over human rights abuses.
‘Complex Relationships’
Nevertheless, the EU and the U.S. are now closer to a common approach to Beijing than was the case under President Donald Trump. They have set up a forum to discuss all issues to do with China, and a recent agreement to suspend aircraft tariffs was in part driven by national security considerations and an understanding that hitting each other with penalties while China produced aircraft with government subsidies made little sense.
During a trip to Brussels last month, Secretary of State Antony Blinken said the U.S. wouldn’t force its allies into an “us-or-them” choice with China. “We know that our allies have complex relationships with China that won’t always align perfectly with ours. But we need to navigate these challenges together,” he said.
Other issues where China featured at the G-7 sherpa meeting included the economy, trade and technology, and how to push back against Beijing’s “vaccine diplomacy.”
In a discussion about Beijing’s increasing role in international development, the U.S. argued for an investment program to rival China’s Belt and Road global infrastructure initiative, an idea that President Joe Biden is weighing with Japan’s Suga.
There was also a shared understanding that global trading rules need be overhauled as they don’t reflect reality, especially when it comes to China. One official said the G-7 can’t demand that other countries adopt their values, but they can insist that others trade like them.
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