Japan wants the Group of Seven advanced economies to take a coordinated approach this year aimed at preventing the “economic coercion” that China has applied to some of its trading partners.

Actions taken by China in recent years, such as suspending imports of Taiwanese pineapples and Australian wine, represent a “clear and present danger” for economies around the world, Yasutoshi Nishimura, Japan’s minister of economy and trade, said in Washington on Thursday. “We expect effective responses to economic coercion will be a major item at this year’s G-7 summit.”

Yasutoshi Nishimura

Japan is the rotating head of the G-7 industrial democracies this year and will host the group’s summit. Nishimura said that “countermeasures” may be necessary to help countries and regions that are the target of mercantilist actions by authoritarian regimes. Identifying chokepoints that could be used by such regimes would also be helpful, he said.

China has repeatedly applied economic punishments toward trading partners amid diplomatic disputes. Japan itself saw its imports of rare earths from China — crucial to a number of manufacturing supply chains — affected in 2010 following a maritime incident in contested East China Sea waters.

Beijing, for its part, has blasted G-7 members for what it says are their own protectionist moves that are designed to prevent China’s economic rise. The Chinese Foreign Ministry has warned that export controls on semiconductors imposed by the Biden administration hurt the global economy and US businesses. Late last year, China also criticized the UK for abusing state power in overturning a chip-factory deal.

Vital Mistake

Japan’s economy chief said that democratic powers had made a mistake more than two decades ago in assuming that deepening economic interdependence, by bringing China and then Russia into the World Trade Organization, would “unquestionably bring about a peaceful world” following the end of the Cold War.

Rather than prosperity becoming the “seabed of peace,” however, it only ended up increasing geopolitical risks, Nishimura said. Authoritarian regimes used economic growth and technological advancement to boost their power.

“The free trade system ended up increasing the legitimacy of authoritarian regimes,” he said. “The illusion we embraced ended up amplifying the threat of hegemonic powers.”

At the same time, there’s no way to “turn back the clock,” and a complete economic decoupling is “impossible,” Nishimura said.

WTO Reform

He urged greater coordination among free-market democracies on measures including export controls, boosting supply chain resilience and energy security. 

He also said that, given how the WTO’s dispute-settlement mechanism is now effectively crippled — after the Trump administration paralyzed the appellate body in 2019 — Japan, the US, Europe and other like-minded partners need to “work hard on reform of the WTO.” This will be “one of biggest challenges we need to work toward this year,” he said.

Nishimura, who also cited Russia’s moves to cut off European energy supplies in the wake of its invasion of Ukraine, was speaking at the Center for Strategic and International Studies think tank in Washington. That’s the venue where the late former Japanese Prime Minister Shinzo Abe famously declared that “Japan is back” on the world stage. 

Nishimura said his nation embraces that same sentiment in leading the G-7 this year.