Isolating China can be “unattainable and harmful,” analysts say, because the G7 crack down on Beijing

US President Joe Biden wants to reduce the risk vis-à-vis China.

Almond Ngan | Afp | Getty Images

The G-7 delivered its strongest message to China over the weekend, but one analyst warned that isolating Beijing is “impossible” and “dangerous”.

The world’s seven largest economies agreed to reduce risk and diversify their supply chains away from China at a summit in Hiroshima, Japan, amid fears of economic constraints. There is a growing awareness among Western nations that their economies are heavily dependent on China. The coronavirus pandemic has highlighted the complexities of critical supply chains, but the ongoing war in Ukraine has exacerbated this reality.

In a joint statement after the summit, the Group of Seven said: “Our policies are not aimed at harming China, nor are we trying to thwart China’s economic progress and development. … At the same time, we recognize that economic resilience is required.” Risk mitigation and diversification.”

Following the G7 announcement, China summoned the Japanese ambassador and ordered companies to stop buying from American chipmaker Micron.

Giuliano Noci, vice rector for China at the Politecnico di Milano, told CNBC’s Squawk Box Europe on Monday that the G-7 had shown a “unitarian” perspective on China.

“[President Joe] Biden spoke of de-risking, not decoupling. “Decoupling” was the buzz word in the United States just a month ago, but given the role the Chinese market plays for multiple products and the level of interconnectedness between supply chains, decoupling is nearly impossible. said Noci.

Risk mitigation means reducing some of the dependencies on China, rather than destroying ties entirely.

“It should be clear that isolating China will not only be impossible on the one hand, but also dangerous on the other,” Noci said.

The change from the Biden administration perhaps underscores the realization that it would take great effort and economic pain to separate China’s economy from China’s.

Figures from the United States Census Bureau showed that the US posted a goods trade deficit with China of about $383 billion in 2022. Data from last year showed a record high in trade between nations and is a testament to the difficulties in separating their economies.

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G-7 leaders went a step further by expressing concern over the situation in the East and South China Seas and advocating “no change” to Taiwan’s status quo.

“There is no legal basis for China’s extensive maritime claims in the South China Sea and we oppose China’s militarization activities in the region,” they said.

Speaking to CNBC, Noci said, “We are moving beyond a unipolar world” where the US was its superpower and entering a bipolar or multipolar world.

British Prime Minister Rishi Sunak said China is the world’s biggest challenge to security and prosperity. The Chinese embassy in London described this as “malicious slander in disregard of the facts,” according to Reuters.