Ahead of G-7, EU 'Nervous' About US Export Controls on China, Expert Says

The Group of 7 countries likely will discuss sanctions, trade and a host of other issues at the upcoming summit in Japan, but the most consequential topic may surround the group’s emerging “de-risking” policy toward China, experts said this week. Several said they expect the G-7 countries to end the summit by releasing more information on the approach, although they also noted that not all Europeans yet agree with the strategy.

William Drozdiak, global fellow with the Wilson Center, said the EU in particular hasn’t reached a consensus on new technology export restrictions against Beijing, even though European Commission President Ursula von der Leyen made the case earlier this year for stronger export controls and investment restrictions (see 2303310036). The Netherlands in March announced plans to try to push through new semiconductor controls at the EU level, but support for that effort remains unclear (see 2303090032).

“Europeans are very nervous about the extent to which the United States seems to want to go in terms of preventing China from acquiring advanced technologies,” Drozdiak said during an event this week hosted by the Wilson Center. “And I think they are fearful that this could impinge on their own trade, their lucrative trade with China, in such a way that it would penalize its populations and their economies in a very severe, severe manner.”

That fear may be especially pronounced in Germany, said Robin Quinville, a former diplomat at the U.S. Embassy in Berlin. She said Germany is “very much a highly manufacturing-led and export-led economy,” and has some “very big players in China.” She also said other European nations are just beginning to implement trade restrictions that the U.S. has had in place for years, such as dual-use export controls and investment screening under the Committee on Foreign Investment in the U.S.

“Europe is only now or in the last few years grappling with the concepts that we have had here,” including “a CFIUS-like process regarding investment,” said Quinville, director of the Wilson Center’s Global Europe Program. “And so this is something that is, I think, a work in progress, and something they still grapple with.”

Drozdiak noted that India, which was invited to the G-7 summit, hasn’t even aligned its Russia sanctions with the G-7 countries, so it remains unclear how the country will respond to a proposed de-risking strategy toward China. “The big problem with the global south, generically speaking, has been that a lot of these countries remain on the fence and have not engaged in the sanctions that the United States and its European allies have imposed,” he said. Drozdiak said he will be looking for “some kind of tacit show of support from” India, which would be “significant.”

Philip Reeker, a former State Department official who now leads the Europe and Eurasia practice at Albright Stonebridge, said the G-7 countries want to end the meeting with a “united, positive, confident message,” including on sanctions. He’s expecting talks to focus on sanctions enforcement and “how to counter the circumvention of sanctions that are already in place.”

But he also expects there to be a large “economic security discussion” during the meetings, including on “managing the relationship with China.” Quinville also expects the talks to focus heavily on China, particularly because there are “differences” between G-7 members on the best way to approach Beijing.

“The focus on de-risking rather than decoupling will be an important one, and I'd expect to hear more about that from this meeting,” she said. “I think that a discussion of China and its intentions will definitely be front and center.”