G7 Summit Discusses Global Economy... Three Key Agenda Items

Discussion on Financial Market and Price Stability
Neutralizing Russia and China’s Circumvention Exports
Measures to Address the Rise of China’s Military Power

At the Group of Seven (G7) summit held on the 19th in Hiroshima, Japan, the leaders of each country are expected to open the talks with discussions on the global financial market crisis triggered by the Bankdemic (bank + pandemic) that began with Silicon Valley Bank (SVB). This will be followed by in-depth discussions on sanctions against Russia for its invasion of Ukraine, and security issues that have expanded into economic problems such as China’s military rise and changes in supply chains. The Nihon Keizai Shimbun reported that the first section of the summit, held on this day, will focus on economic agendas, with these three key issues being the main topics of discussion.

On the 18th, one day before the opening of the Group of Seven (G7) summit, Japanese police were on alert around Hiroshima Station in Japan. Japan deployed 24,000 police officers in Ujinashima city, where the Grand Prince Hotel Hiroshima, the venue of the summit, is located, significantly strengthening security. [Hiroshima=Reuters·Yonhap News]

◇ Inflation, Bankdemic... Discussions to Overcome the Global Economic Crisis

The G7 leaders are expected to discuss measures to stabilize financial markets in response to the ongoing global inflation and bankdemic. Central bank governors from each country shared their intention to work together to stabilize financial markets at the G7 finance ministers’ meeting held prior to the summit.

U.S. President Joe Biden (left) and Japanese Prime Minister Fumio Kishida shake hands ahead of the U.S.-Japan summit held in Hiroshima on the 18th, one day before the opening of the Group of Seven (G7) summit. [Hiroshima=Photo by Reuters and Yonhap News]

The participating countries have the responsibility to stabilize their financial markets and prices and to boost economic growth rates in response to the US interest rate hikes. Failure to respond to market crises could lead to a recession phase. Last month, the International Monetary Fund (IMF) predicted a 2.8% real growth rate worldwide this year but warned that if financial instability spreads, the growth rate could fall to the 1% range. Additionally, the US government’s debt default risk is also likely to be a key issue related to financial market stability discussed at this summit.

◇ Russia, Discussions on Blocking Sanctions Evasion Networks

The economic issues triggered by Russia’s war in Ukraine are also expected to be a core agenda item at the talks. The leaders of the seven countries plan to devise solutions to block Russia’s evasion of sanctions.

Recently, due to Western sanctions, Russia has been unable to procure semiconductors, causing disruptions in weapons production, and has adopted an export evasion strategy through three countries: China, Hong Kong, and T?rkiye. The Nihon Keizai Shimbun stated, “China and India are expanding trade with Russia, which has prevented significant damage to the Russian economy,” and added, “Each country is expected to discuss measures to block sanctions evasion networks.”

◇ Discussions on Economic Security Issues in the Indo-Pacific... Targeting China

Geopolitical security issues that have expanded into economic problems are also expected to be major topics of discussion. The countries judge that China’s military rise in the Indo-Pacific region is creating tensions in the international community and are expected to seek measures to resolve geopolitical conflicts. Key agenda items will likely include semiconductor supply chains centered on Western countries, securing advanced technologies such as artificial intelligence (AI), and cross-strait issues in response to China’s rise.

The countries are also reported to announce a separate joint statement affirming a collective response to China’s economic coercion. Through this, they are expected to solidify an economic system centered around the G7.

In addition, regarding nuclear disarmament and non-proliferation, measures for nuclear disarmament such as the Comprehensive Nuclear-Test-Ban Treaty (CTBT) and the Fissile Material Cut-off Treaty (FMCT) are expected to be discussed, with a separate outcome document prepared. Japan confirmed the contents of the “Hiroshima Action Plan,” announced at the Nuclear Non-Proliferation Treaty (NPT) Review Conference in August last year, at the G7.

Chinese President Xi Jinping [Beijing=AFP·Yonhap News]

Meanwhile, the Japanese government plans to hold an expanded meeting on the 20th, inviting leaders from eight countries?South Korea, Australia, India, Indonesia, Cook Islands, Comoros, Brazil, and Vietnam?to broadly discuss the G7 summit agendas.