With key aspects of the Trump-era phase one deal having now expired, questions loom about what comes next for US trade strategy toward China. Given domestic considerations in both countries, the prospect of a “phase two” deal covering substantive issues is remote. Instead, the Biden administration appears likely to focus efforts on litigating the shortfall in China’s purchases under phase one and outlining the structure of its regional strategy through the Indo-Pacific Economic Framework.
Recent days have seen a series of sudden, market-roiling regulatory moves by Beijing. These developments come amid a months-long crackdown on private businesses—from last November’s canceling of the Ant Financial listing to the past weekend’s order banning education companies from raising capital. Put together, these moves send a clear signal of both ideology directed against the private sector and a consequent reduction in China’s future potential growth.
Leaders from the Group of Seven (G7) and four guest countries meet for a summit in the UK on June 11-13. Though the agenda will be expansive, considerable attention will be focused on an industrial giant that is not in the room: China. G7 leaders have an opportunity to reset the narrative on growth prospects for the democratic world and show they are capable of collective action on areas of shared concern involving China. This note looks back at the early drivers of the G7 and what we might see this time.
