Tokyo, Japan – The G7 countries all agree on the threat of China’s economic coercion.
But reaching a consensus on concrete action to counter Beijing promises to be a challenge for the club of wealthy democracies amid divisions over how to manage ties with the world’s second-biggest economy.
The leaders of the G7 — Canada, France, Germany, Italy, Japan, the United Kingdom and the United States — have signalled that China’s use of punitive trade measures will be high on the agenda of their three-day annual summit, which kicks off in Hiroshima, Japan, on Friday. European Union leaders will also be present.
China’s use of coercive economic moves has been an issue of growing concern in the Asia Pacific and Europe in recent years, with Japan, South Korea, Australia and Lithuania all facing trade restrictions following disputes with Beijing on issues ranging from the origins of the COVID-19 pandemic to Taiwan.
While the G7 is expected to release a statement that will express concern about China’s economic coercion and propose ways to work together on the issue, it is unclear how far Japan and European members may be willing to go with measures that could antagonise Beijing given their heavy reliance on Chinese trade.
Japan and the European Union both count China as their top trading partner. The United States, which has led global efforts to push back against Beijing, does the most trade with Canada and Mexico, with China ranking as its third-biggest partner.
Sayuri Shirai, a professor of economics at Keio University in Tokyo, said Japan and Europe may be more cautious than the US about actions that could disrupt trade relations with China.
“China’s GDP [gross domestic product] is going to exceed the US in the next decade and have a huge market … So having access to China’s market is important for advanced economies,” Shirai told Al Jazeera.
“Japan has a military alliance with the US so they may be closer to the US, but they may also have to be careful about their companies’ interest in China since many companies have done a lot of foreign direct investment in China,” Shirai added.
(Al Jazeera)
‘Economic NATO’
Some of the loudest calls for coordinated action against China have come from the US, where President Joe Biden has made countering Beijing a central pillar of his foreign policy.
The Hiroshima summit will give an indication of how far Japan and European members of the group may be willing to go with measures that could antagonise Beijing given their heavy reliance on Chinese trade [Richard A Brooks/AFP]
Earlier this year, Bob Menendez, the Democratic chairperson of the Senate Foreign Relations Committee, called for the formation of an “economic NATO” to respond to economic coercion, military aggression and violations of sovereignty.
Former UK Prime Minister Liz Truss also floated the idea of an economic version of NATO in a speech in February in which she called on world leaders to be ready to impose coordinated sanctions on China if it makes aggressive moves towards self-governed Taiwan, which Beijing claims as its territory.
In March, the EU unveiled an “anti-coercion instrument” for member countries that includes a new dispute resolution mechanism and countermeasures such as customs duties and restrictions on public procurement.
China has rejected accusations that it uses trade as a weapon and accused the US of hypocrisy given its own use of sanctions and export controls.
“If the G7 summit will put ‘countering economic coercion’ on its agenda, I suggest that they should first discuss what the US has done,” Chinese Foreign Ministry spokesperson Wang Wenbin told a regular press conference last week.
“China itself is a victim of US economic coercion and we have always been firmly opposed to economic coercion by other countries.”
Enforcement is key
The divisions between the US and other G7 members on China are not the only differences to have emerged ahead of this weekend’s summit.
Last month, the Financial Times reported that Japan and the EU had objected to a US proposal for a G7-wide ban on practically all exports to Russia after deeming it to be unrealistic.
Still, US officials have sought to raise expectations that the G7’s stand on economic coercion will go well beyond rhetoric.
On Tuesday, US Ambassador to Japan Rahm Emanuel, who has criticised the World Trade Organization dispute resolution as slow and called for the US to lead collective action against Chinese coercion, told his social media followers to “expect action”.
“G7 members are developing the tools to deter and defend against China’s economic intimidation and retaliation,” Emanuel said on Twitter.
Mark Kennedy, director of the Wahba Institute for Strategic Competition at the Wilson Center in Washington, DC, said he expected the G7 to make progress towards coordinated action due to the growing realisation of the dangers of economic overreliance on any one country.
“Europe has witnessed the impact of coercion within its ranks more vividly than the US, most recently in Lithuania, and endured the pain from overreliance on a sole supplier as it weaned itself off reliance on Russian energy,” Kennedy told Al Jazeera.
“A focus on de-risking by diversifying supply chain … by building partnerships with low- and middle-income countries through investment and aid is very unifying. It also can be presented to the Global South as a location for alternative sourcing.”
Henry Gao, a Chinese trade expert at Singapore Management University, said, however, that the actual implementation of any coordinated measures is likely to be difficult.
“It’s easy to come up with statements, but enforcement will be a big problem, especially for Asian countries which have very close economic ties with China,” Gao told Al Jazeera.
“One model that might be useful in this regard is the EU’s anti-coercion instrument, which moves the decision-making from the country level to the EU level, but this would be very hard to replicate even at the G7 level, not to mention on a global basis.”
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
