G7, Including Canada, Warns China of 'Further Measures' Over Russia Support and Trade Practices

Leaders from the Group of Seven (G7) major democracies concluded their summit in Italy with a direct and forceful message for Beijing, warning of potential new actions if China continues to support Russia's war effort in Ukraine and persists with what the group calls unfair economic policies. The joint communiqué, backed by Canada, the United States, Britain, France, Germany, Italy, and Japan, marks one of the most significant unified condemnations of China's actions to date, addressing both security and economic grievances.

The primary security concern outlined by the G7 is China's role in sustaining Russia's defence industrial base. While Beijing has refrained from sending lethal weapons to Moscow, the G7 leaders stated that China is enabling Russia's war by providing dual-use materials and components. This includes microelectronics, machine tools, optics, and other technologies that Russia is using to circumvent Western sanctions and rebuild its military capacity. The statement called on China to "cease the transfer of dual-use materials, including weapons components and equipment, that are being sent to Russia’s defence sector." The leaders expressed "deep concern" over this support and threatened to impose "further measures," including sanctions, on firms and financial institutions in China and third countries that facilitate this trade.

Prime Minister Justin Trudeau echoed these concerns, emphasizing that China cannot expect to maintain normal trade relationships with the West while simultaneously fueling the largest conflict in Europe since World War II. The unified message from the summit reflects a growing consensus among G7 leaders, including Canada, who have issued a stern warning to China over its destabilizing actions.

Economic Tensions and 'Harmful Overcapacity'

Beyond the war in Ukraine, the G7 leaders took aim at China's economic model, specifically its industrial policies that have led to what they term "harmful overcapacity." The statement criticized China's "non-market policies and practices" and extensive state subsidies, particularly in burgeoning sectors like electric vehicles (EVs), solar panels, and lithium-ion batteries. The G7 argues that this state-sponsored production glut leads to artificially cheap Chinese exports flooding global markets, which distorts the global economy and threatens the viability of industries in their own countries.

This issue is particularly resonant for Canada, which is investing heavily in building its own EV supply chain and green technology sector. The influx of low-cost, subsidized Chinese products could undermine these investments and cost Canadian jobs. The G7 statement affirmed the group's commitment to protecting their workers and industries from unfair competition, stating they are not seeking to decouple from China but are focused on "de-risking" and diversifying their supply chains. This unified front was a key outcome of the summit, where the G7, including Canada, confronted China on its support for Russia and its market-distorting economic policies.

The warning comes as both the United States and the European Union have already taken steps to counter this trend. The Biden administration recently announced steep tariff hikes on a range of Chinese imports, including a 100% tariff on Chinese-made EVs. The European Commission has also launched an investigation into Chinese EV subsidies, which is expected to result in new tariffs.

China's Response and Geopolitical Implications

Beijing has consistently rejected the G7's accusations. In response to the summit's conclusions, China's foreign ministry spokesperson accused the group of using China-related issues as a pretext for protectionism and of making "baseless accusations." Beijing maintains that its trade with Russia is normal economic cooperation and denies supplying lethal aid. On the economic front, China argues that its success in green industries is due to innovation and competitive advantages, not unfair subsidies, and that its exports are helping the world transition to a greener economy.

The G7's increasingly firm stance highlights the complex and often adversarial relationship between the West and the world's second-largest economy. The statement also touched on other areas of concern, including China's actions in the South China Sea, its human rights record in Xinjiang and Hong Kong, and the importance of peace and stability across the Taiwan Strait. By addressing security, economic, and human rights issues in a single, unified document, the G7 is signaling a more holistic and coordinated approach to managing the challenges posed by China. The summit's outcome sets the stage for a period of heightened diplomatic tension and potential economic friction as the West seeks to compel a change in Beijing's policies.