List of Contents
- What are the key observations taken on the economic decoupling of China?
- What are the climate-related decisions taken at the Hiroshima G7 Summit?
- How Europe, Japan and others have diluted their decoupling with China?
- What are the implications of this shift towards a milder version of economic containment of China?
Source: The post is based on the following articles
“G7’s climate wishlist, and the realities of efforts to cap warming” published in the Indian Express on 22nd May 2023.
“The end of ‘decoupling’?” published in the Business Standard on 22nd May 2023.
Syllabus: GS – 2: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.
Relevance: About Hiroshima G7 Summit.
News: Recently, Hiroshima G7 Summit occurred. At the summit, the G7 countries listed a set of milestones that need to be achieved for a realistic chance of containing the global rise in temperatures to within 1.5 degrees Celsius.
What are the key observations taken on the economic decoupling of China?
Dealing with China’s growing economic power: The grouping agreed on “cooperation” to “support a more significant role for low and middle-income countries in supply chains”. So, they would “address non-market policies and practices designed to reinforce dependencies, and will counter-economic coercion”.
About peak greenhouse gas emissions: The G7 stressed the need for a global peak in emissions by 2025. As the G7 countries already achieved peak emissions, the summit asked all “major economies” to ensure that their individual emissions do not continue to rise beyond 2025.
Note: The 2025 peak year is not mandated under the Paris Agreement or any other international decision. India has long made it clear that its emissions might grow in the next decade. China, the world’s largest emitter, has also indicated that it would peak only towards the end of this decade.
The biggest emissions year so far has been 2019 — about 55 billion tonnes of carbon dioxide equivalent.
About reaching Net-zero by 2050: The G7 reiterated its commitment to turn net zero by 2050, and asked all ‘major economies’ to attain net-zero status by that year. The recent WMO’s State of the Global Climate 2022 highlights that the 1.5 degree Celsius threshold was likely to be breached, at least temporarily.
Note: Scientists said that the world must become net zero by mid-century to meet the 1.5 degree Celsius target. China, Russia and Saudi Arabia have said that they would turn net-zero only in 2060, while India has set 2070 as the target.
About ending fossil fuels: The G7 countries did not mention the deadline for fossil fuels. Instead, they were committed to accelerating the phase-out of “unabated fossil fuels” in line with 1.5 degree Celsius trajectories.
|Read more: About Hiroshima G7 Summit: In Hiroshima, En Route To A North-South Bridge|
How Europe, Japan and others have diluted their decoupling with China?
European Union: Europe sees decoupling being used by the US for inward-looking controls, subsidies and protectionism.
Earlier, Europe was worried about dependence on China. But now, they recognise that the globalised European economy benefits more than most from trade ties. So, they are now trying to identify the specific areas where they need to insulate their economies from possible coercion or dependence,
Japan: Japan is far more careful about its criticism of China. This is because a) It is a neighbour of China, b) Japanese companies were the first targets of Beijing’s economic coercion. For instance, Chinese rare earths exports to Japan were curtailed following a standoff at the disputed Senkaku Islands.
But now, they isolated their “US” and “China” supply chains and decoupled their businesses in Chinese supply chains. Both Japan and Korea are of this similar view. This is because North-east Asian nations think that their powerful conglomerates are being disadvantaged in the implementation of decoupling.
|Read more: G7 Summit Presents a Template for Indian Engagement With the West|
What are the implications of this shift towards a milder version of economic containment of China?
Integration with China is a clear path to prosperity: All the fast-growing economies have benefited from building supply chains that pass through China. Vietnam, Brazil, Indonesia and India have supply chains linked with China.
For example, China is Brazil’s largest market, absorbing over a quarter of its exports. Similarly, over half of the value of Vietnamese exports now comes as foreign value-added and China is the largest single contributor to that.
So, India’s demand for the multi-sectoral global decoupling of China might not yield adequate results.