Building Economic Resilience and Security in the Indo-Pacific Post G7 Hiroshima Summit
INTRODUCTION
In a world grappling with multifaceted challenges, ranging from the enduring specters of war and climate change to the complexities of geopolitical tensions and global pandemics, the G7 leaders recognized the urgent need for collective action. In May 2023, in Hiroshima, they issued "Statement on Economic Resilience and Economic Security," underscoring their commitment to addressing vulnerabilities across seven crucial domains.
The first imperative involves fortifying supply chains for strategic goods, fostering partnerships globally to enhance communication, mitigate disruptions, and share insights. Concurrently, efforts are directed towards bolstering critical infrastructure, especially in the digital realm, to secure the ICT ecosystem and cultivate a competitive and trustworthy global digital economy.
The G7 leaders also pledged to counter nonmarket policies and practices, such as harmful industrial subsidies and forced technology transfers, aiming to reduce strategic dependencies and systemic vulnerabilities. Additionally, they resolved to confront economic coercion, preventing the exploitation of vulnerabilities to undermine policies and objectives.
In the digital sphere, the G7 leaders committed to countering harmful practices, and promoting global value and supply chain integrity. They emphasized international cooperation in standard-setting activities, and sharing information with public and private stakeholders. Lastly, preventing the leakage of critical technologies emerged as a paramount goal, with coordinated efforts to safeguard cutting-edge technologies from misuse.
Despite regional initiatives like the Indo-Pacific Economic Framework gaining traction, fulfilling these commitments demands sustained and coordinated efforts from governments, private sectors, and NGOs. Against this backdrop, the Asia Society Policy Institute (ASPI) hosted a virtual public panel discussion to examine the progress made in implementation with the G7 goals both individually and collectively. The discussion aimed to evaluate the efficacy of measures taken so far and outline the ongoing work required to meet these critical objectives.
KEY POINTS RAISED BY SPEAKERS
- Tatsuya Terazawa, Chairman and CEO of the Institute of Energy Economic, Japan (IEEJ), highlighted how Japan, with its long experience of grappling with economic security concerns, particularly following the 2010 rare earth embargo from China, has played a key role in this discussion and shifted it beyond traditional energy security to technology leakage, economic coercion, and infrastructure attacks. Emphasizing that “Japan [or] the U.S. cannot address this challenge alone,” Terazawa stressed the importance of international collaboration and saw the recent acquisition of U.S. Steel by Japan as a “litmus test” for American willingness to collaborate amid shared challenges from China. He particularly welcomed the recently launched G7’s Platform on Economic Coercion but noted that it has been largely restricted to information sharing, adding “We have to work together; not just talking with each other, but collaborate, integrate and unite.”
- Matthew P. Goodman, Director of the Greenberg Center for Geoeconomic Studies at the Council on Foreign Relations (CFR), pointed out that China’s use of economic coercion tended to be against individual companies and smaller countries, especially non-G7 members. He argued that “the key to responding to Chinese pressure [is] to frustrate China's actions rather than to punish them for what they have done.” He explained this could take the form of enhancing resilience — via supply chain diversification to reduce dependencies on China — and providing “common relief” through financial assistance and maintaining a united front in support of the targeted economies, which he argued has been insufficient when Australia and Lithuania were being subjected to China's coercive practices.
- Hosuk Lee-Makiyama, Director of the European Centre for International Political Economy (ECIPE), emphasized that the EU is not a security organization and has to "carefully curate" the dialogue on economic security as an internal one concerning commercial issues. He pointed out that both the US’s Inflation Reduction Act (IRA) and China’s coercion against Lithuania spurred renewed political willingness for new EU legislation such as the Anti-Coercion Instrument, which he saw as a symbolic extension of the bloc’s mandate. He went on to argue that “the average Europeans don’t see [...] the U.S.'s IRA or China's distorted practice [...] as much worse than the other,” and highlighted the importance of Japan as a “marriage counselor” in mediating the tensions between the U.S. and Europe, as well as the G7 in sharing best practices and maintaining clear communications in their responses to the shared challenges posed by Russia and China.