China's Xi Jinping was not invited to the G7 summit, but much of the meeting was devoted to him as US President Joe Biden seeks a united democratic front against China and Russia. Photos: AFP / Nicolas Asfouri, Nicholas Kamm

The European countries have their own plans, welcoming US leadership and resuscitating trans-Atlanticism while not jeopardizing their cooperation with China.

They will tread softly regarding Washington’s calls to crack down on China. Cooperation in business circles will not be dented because enterprises will vote with their feet. 

CNN reported that the leaders of the Group of Seven aired serious differences over how best to approach China during a session of the recent G7 summit, with Germany and Italy in particular, as well as European Union leaders, opposed to dealing with Beijing in a confrontational manner.

Also read: G7 meet underscores fault lines on China

As The New York Times highlighted, there is “anxiety” in Europe generally about US politics. Ian Lesser, a vice-president of the German Marshall Fund of the United States, was quoted as saying: “Simply, what is going to happen in the midterm elections? Whether Trumpism will prove more durable than Mr Trump. What is coming next in American politics?” 

Equally, the Europeans are well aware that the trade war with China has hurt the US badly. According to a study by Oxford Economics in January, the cost of the trade war for the US was about 0.5% of gross domestic product in 2018-19, an estimated 245,000 jobs and US$88 billion in real household income.

If the scenario escalates, US GDP will shrink by $1.6 trillion over the next five years and result in 732,000 fewer jobs in the country by 2022.

Selective cooperation

Indeed, President Joe Biden’s administration also realizes that merely seeking conflicts with China or being blindly hardline is unwise, as the US still needs to coordinate with China regarding issues like trade and regional order.

That was the signal in Secretary of State Antony Blinken’s call with China’s top official on foreign affairs, Yang Jiechi, on June 11, on the eve of the G7 summit in Cornwall, England. 

US President Joe Biden and British Prime Minister Boris Johnson pose for the official family picture during the G7 Summit in Cornwall, England, on June 11, 2021. Photo AFP / EyePress News

The State Department readout projected Blinken’s call as a fine example of the selective cooperation with China that the Biden administration desires. But the Chinese readout underscored that Beijing is hanging tough on its core concerns.

The US is aware that if it crosses China’s red line on the Taiwan question, there is going to be a heavy price to pay in terms of America’s own interests. Basically, it is hoping to hold Beijing in play without risking US long-term interests.

That is to say, for all practical purposes, the Biden administration is respecting China’s red line and wants to maintain flexibility in its handling of the overall relationship with Beijing.

This is very important, as both sides know that the Taiwan question is the most vital indicator for Beijing to observe the momentum of China-US relations. 

Again, last Thursday, Chinese Commerce Minister Wang Wentao and US Commerce Secretary Gina Raimondo had a “candid and pragmatic” exchange of views on relevant issues of mutual concern in the business sector, according to the Chinese statement.

Interestingly, this was the third discussion over a two-week period initiated by top US economic and trade officials with their Chinese counterparts in the run-up to the summit.

Chinese Vice Premier Liu He held a virtual meeting with US Treasury Secretary Janet Yellen on June 2, and Liu also held a phone call with US Trade Representative Katherine Tai on May 27.

Working to solve problems

The Chinese statement last Thursday on the conversation between the two commerce ministers said the two sides agreed to promote pragmatic cooperation in trade and investment, while maintaining working communication. 

Earlier, a Chinese spokesman told a press conference that Beijing and Washington had resumed “normal communication” in the economic and trade fields and would work together to solve “specific problems” in a practical manner for producers and consumers.

All this only underlines that the US has realized the importance and necessity of bringing China-US economic trade ties back on track.

Meanwhile, even as the US ramped up cold-war idioms against China at the G7, China unrolled a potent countermeasure of its own. Last Thursday, its top legislature passed the Anti-Foreign Sanctions Law, the first of its kind, providing strong legal support and guarantees for China against unilateral and discriminatory measures imposed by other countries.

The new law empowers China’s State Council to create its own sanctions on any organization or individual that participates in the formulation, decision-making or implementation of sanctions against China. In effect, this gives Beijing the legal framework to target entities that willfully damage China’s reputation through smear campaigns. 

Clearly, this move testifies to an increasingly confident China on the international stage. If China previously lacked the economic power or political will to retaliate against US sanctions, it now has that capability.

Historically, China only retaliated against sanctions through countermeasures on a case-by-case basis. But China is now entering the sanctions game, making it clear that the US and its allies no longer will have a monopoly over sanctions as an instrument to impose on China their specific political values. 

In the words of a Chinese commentator: “In moving from an ad hoc response to a fully-fledged legal framework, China has also demonstrated its willingness to promote the rule of law in its dealings in the international arena. This follows President Xi Jinping’s instructions to use the rule of law to defend China’s sovereignty.

Chinese President Xi Jinping recently signed a bill aimed at countering sanctions against China. Photo: AFP / Thet Aung

Response to sanctions

“It is also an essential counter to what has variously been described as ‘long-arm jurisdiction.’ … Whether the US and its allies prefer to accept it or not, Iran and [the] DPRK are sovereign states … China now has a stable and predictable framework to respond in kind.” 

By Friday, President Xi had signed the bill into law in a big signal to the G7 that even hysterical tirades or smear campaigns – such as the Wuhan lab-leak hypothesis – in an orchestrated way could result in Chinese sanctions.

Beijing has noted for the record that the G7 communiqué is “the most systematic condemnation against and interference in China by major Western powers.” But its language is discernibly “softer.”

Evidently, while a collective tone against China was possible at the G7, Washington failed to get the group to slander China. In sum, the final communiqué turned out to be a product dominated by the US with compromise by all.

All empirical evidence is stacked against a Western coordinated move, leave alone unified hostile action against China. The bottom line is that while European countries may have “systemic” differences with Beijing, their economic relations with China are competitive but they also have strategic needs for cooperation. 

Interestingly, according to China Central Television, Blinken too acknowledged during his phone call with Yang on Friday on the eve of the Cornwall summit that the series of contacts between the US and China in the most recent weeks are beneficial to bilateral relations and the US is looking forward to increasing contact and exchanges with China at all levels. 

Blinken reportedly said that the US adheres to the one-China principle and abides by the three China-US joint communiqués and hopes to maintain communication and coordination with China on major international and regional issues. 

The G7 communiqué’s formulation on the Taiwan question confirms that the US wants to maintain flexibility in its handling of the China-US relationship. That is a very important indicator. 

This article was produced in partnership by Indian Punchline and Globetrotter, which provided it to Asia Times.

M K Bhadrakumar is a former Indian diplomat.