It seems like important people are always meeting around the world, enjoying refreshments together, and doing important things. But what exactly are they doing? The G7 conference is one such meeting, and this year, the biggest elephants in the room were Russia and China. Inevitably, the economy is always tied to global discussions, so we will delve into the impact of sanctions and supply chains in combating the G7’s opponents.
The G7 (Group of 7) is an annual meeting for the top democracies around the world to coordinate global economic policies. Basically, the US and its friends, France, Italy, Japan, Germany, the UK, and Canada (and the European Union, the “unenumerated” one) meet together to decide how they want to run their economies and support the smaller countries under their wings. The combined value of these countries equate to 44 percent of the global economy. It was formed in 1975 for non communist powers to address economic concerns during the OPEC oil embargo.
This year, the conference was held in Hiroshima, Japan, from March 19 to March 21. The most pressing topics were the Ukraine crisis and the growing strength of China.
Russia and China
The most urgent and most media covered issue was Russia’s war against Ukraine. The conference condemned Russia’s choice to attack another country unprovoked and expressed its intention to curb Russia’s ability to wage war. Economically, this meant reducing reliance on Russian energy, closing them off from the international financial system, and imposing more sanctions. So far, the G7 has sanctioned over 300 entities from Russia.
The G7 countries also expressed their concern for China’s non-market policies. Such non-market actions use business and money for coercive and manipulative purposes that results in an unfair playing field for the global economy. China has been developing nuclear weapons without disclosing their progress and threatening to invade Taiwan, which the G7 disagrees with.
New Plans
To reduce economic reliance on countries like Russia and China, the G7 presented their Partnership for Global Infrastructure and Investment. This is an agreement between the countries and their allies to enhance supply chains through global partnerships. Areas of focus include critical minerals, semiconductors, and batteries, all of which are essential products to economies and technological development around the world. They also sought to reduce economic coercion, a tactic commonly used by China which imposes economic losses for a country if they refuse to adopt certain policies. They established the Coordination Platform on Economic Coercion, which essentially creates a system of early warning and rapid information sharing to report signs of economic coercion and accelerate the process of aid and support.
Moreover, the G7 agreed to accelerate action on their Sustainable Development Goals, opting to increase investment in food and health systems and climate change solutions. They acknowledged the problem of increased debt playing a part in undermining progress towards these goals, and fully supported the G20’s DSSI plan to improve the Common Framework for Debt Treatments, a project used to address debt problems around the world. Another aspect of their work was promoting Multilateral Development Banks, which are used to analyze national business models and transform them into better models that address climate change, pandemics, and other global concerns to increase poverty reduction. The US contributed millions of dollars to programs for greater access to essential health services, including the Pandemic Fund.
The G7 conference has been considered to be somewhat outdated in the modern world because of its exclusion of other emerging country powers like Brazil and India. There has been increased support for the G20, which is a larger group of countries that meets to address similar economic issues. However, the G7 conference is still an important meeting point for western countries to strengthen their common economic goals and update their definitions for a successful global economy. Though the conference has little direct or immediate effect on individual lives, it sets a precedent for the direction of the world’s economic goals and contributes to a trickle-down effect that results in tangible developments like the public’s opposition against Russia and China, the emergence of clean energy companies, and the increased funding of food security and health systems.
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