MKS sports on June 12, 2024 in Apulia, Italy. Leaders of G7 nations will gather in southern Italy this week in an attempt to strengthen their unity despite growing divisions over the Ukraine crisis. Photo: VCG" src="https://www.globaltimes.cn/Portals/0/attachment/2024/2024-06-12/cb3c3ad8-5248-401c-a16a-451ab1b8dbc8.jpeg" />

Police vehicles close a road in the red zone around Borgo Egnazia which will host the G7 summit, on June 12, 2024 in Apulia, Italy. Photo: VCG

Group of Seven (G7) leaders held a final day of talks at their annual summit on Friday in the southern Italian region of Puglia, with discussion of China's "overcapacity" reportedly topping the agenda. Chinese experts said this reflected G7 countries' anxiety and fear over their weakness in the international competition across new industries, and they are attempting to label China's advantageous industries as having "overcapacity" to curb the country's development.

This year's G7 summit was mocked by some Western media as a weak summit, as G7 leaders were mired in deep domestic power struggles. Moreover, the growing divergencies toward China have also made G7 more divided than ever. 

Fair trade with China, notably on green technology, will be discussed by US President Joe Biden and the leaders of Japan, France, Germany, Italy, Canada and Britain, AFP reported. "G7 countries are on the same page vis-a-vis China," a Japanese government source told AFP.

The meeting in Italy criticized China's "harmful" industrial "overcapacity," according to a draft statement seen by AFP Friday. 

The meeting comes amid souring trade relations between China and the West, exemplified by the European Union's announcement this week of a plan to impose new tariffs on Chinese electric vehicles.

Some Western countries' claims of so-called "industrial overcapacity" in China's new energy sectors such as electric vehicles (EVs), solar panels and lithium batteries are fabrications, He Weiwen, a senior fellow from the Center for China and Globalization, told the Global Times on Friday.

Thanks to China's advantages such as large-scale manufacturing and complete industrial and supply chains, China's EV industry leads the world. 

The G7 countries' "overcapacity" narrative is driven by their anxiety and fear over their weakness in the international competition across new industries, showing their lack of confidence, and they are attempting to label China's advantageous industries as having "overcapacity" to curb the country's development, He said.

Following the US' footsteps, the European Commission has announced a decision to impose additional provisional tariffs on Chinese battery EVs imports. However, the G7 itself is divided in its trade policies toward China. For example, Germany is competitive in emerging industries and has many mutual investments with China and is therefore less inclined to impose tariffs on Chinese EVs, He said.

"China has multiple countermeasures, but how China responds will depend on what would be the most beneficial option for us," He said.

According to industry insiders, China is internally moving ahead with the procedure to raise the temporary tariff rate on imported cars with large-displacement engines, Yuyuantantian, a social media account under China Media Group, reported on Thursday.

A Chinese auto industry insider has previously told the Global Times that China should consider raising the temporary tariff rate on imported cars with engines larger than 2.5 liters, and said China's temporary tariff rate on imported vehicles could be raised to a maximum of 25 percent. The insider said that such a move would be not only in line with WTO rules, but also in line with China's broader efforts to promote the green transition in the auto industry and pursue the goal of reducing carbon emissions.

The EU exports $18 billion worth of cars with large-displacement engines to China each year, higher than the value of EVs China exported to the EU in 2023.

The US' vehement call for G7 to act in coordination against China's trade policies shows that Washington's foreign policy of decoupling from and cracking down on China is fundamentally unchanged, Liu Weidong, a research fellow at the Institute of American Studies at the Chinese Academy of Social Sciences, told the Global Times on Friday.

Liu said that as the US' previous export restrictions and crackdown on Chinese high-tech industries are ineffective, it is now focusing on China's green industry.

"By doing so, the US aims to maintain its pressure on China and contain China's development of emerging industries to maintain its hegemony. Lacking power to curb China itself, the US is attempting to court its allies," he said.

Contrary to the US' "decoupling" and "small yard, high fence" approach through closed and exclusive small circles, China will open its door wider and wider and welcome foreign companies to operate in the market, Liu said. He said China can also expand exports of EVs to other developing countries and establish manufacturing lines there to help their green economy transition.

A weak, fragmented G7

This year's G7 was mocked by some Western media as a weak summit, with US media outlet Politico publishing an article titled "6 lame ducks and Giorgia Meloni: Meet the G7 class of 2024."

France's Emmanuel Macron and Britain's Rishi Sunak are both fighting snap election campaigns they called in last-ditch efforts to reverse their flagging fortunes, Politico said in the report.  

Germany's Olaf Scholz was humiliated by far-right nationalists in last weekend's European Parliament election and could soon be toppled himself, according to the report. 

Justin Trudeau, prime minister for nine years in Canada, has spoken openly about quitting his "crazy" job, while Japan's Fumio Kishida is enduring his lowest personal ratings ahead of a leadership contest later this year, it said. 

"Most importantly, the US leadership is at its weakest this year as other members in G7 are watching with suspicion and waiting warily for the US presidential result," Lü Xiang, a research fellow at the Chinese Academy of Social Sciences, told the Global Times. 

Lü also said there are growing divergencies among G7 on various issues, such as so-called China's "overcapacity" and tariffs against China, as some European countries share close business ties with Beijing and are less willing to provoke it on trade issues. 

Germany, a major trade partner with China with a huge automobile sector, said the tariffs would harm German companies.

German Transport Minister Volker Wissing on Wednesday said the threat risked a "trade war" with Beijing, according to media reports. 

As agreed between China and the EU and at the invitation of Vice Prime Minister Xavier Bettel of Luxembourg, Member of the Standing Committee of the Political Bureau of the CPC Central Committee and Vice Premier of the State Council Ding Xuexiang will hold the fifth China-EU High-Level Environment and Climate Dialogue at EU Headquarters in Brussels and visit Luxembourg from June 17 to 21, Foreign Ministry Spokesperson Lin Jian announced on Friday. 

China and the EU share extensive common interests and broad space for cooperation in green development, and have maintained good dialogue and cooperation in this regard. Since the establishment of the China-EU High-Level Environment and Climate Dialogue in 2020, the two sides have successfully held four rounds of dialogue, which has played a positive role in jointly addressing global challenges in environment and climate governance, strengthening communication and coordination on bilateral and multilateral policies, and promoting mutually beneficial cooperation, he said. 

We hope to deepen and solidify our green partnership with the EU and make green the most distinctive color of China-EU cooperation, Lin said. 

Chinese experts said that Ding's visit highlights the huge cooperation potential between China and the EU on green products, and may also remind the EU that slapping tariffs is not only shooting itself in the foot, but also slows global efforts in green transition. 

By imposing tariffs against China, the EU hopes to follow the US' footsteps and compete with China, but at the same time, it is afraid that this will seriously affect economic and trade relations between China and Europe, and is worried about becoming a sacrificial lamb in the struggle between China and the US, Wang Shuo, a professor with the School of International Relations at Beijing Foreign Studies University, told the Global Times.

On the other hand, divergencies over tariffs on China are simmering within the EU. The current atmosphere of isolationism in Europe is moving further away from the so-called open and free trade that it claims to have, said Wang. 

He warned that EU politicians should prioritize Europe's own interests and the welfare of its people. If they truly believe that Europe's interests are being seriously affected, self-protective behavior can be understood, but the path Europe has chosen is not the most ideal. Competition is normal, but using unfair means to compete is not, he said.