As geopolitical tensions continue to reshape global economic ties, the Group of Seven leaders will be tackling economic security issues focused on China during the summit in Hiroshima, which begins Friday.

In the lead up to the meeting, reports are circulating that with China in mind, the leaders’ meeting will be touching on “economic coercion” — engaging in trade disputes for political aims — and address the need to further strengthen international cooperation to counter such moves.

On top of the main joint statement, the Hiroshima summit is expected to result in the release of documents relating to specific policies, including economic security.

In an apparent effort to reduce dependence on China for strategically important goods, such as semiconductors, materials for electric vehicle batteries and pharmaceuticals, the G7 group aims to enhance cooperation with emerging economies, or the "Global South," with nations including India, Indonesia and Brazil invited to the event.

Supply chains first emerged as a mainstream topic of discussion after the COVD-19 pandemic shone a light on the interconnectivity and reliance on far away countries for access to essential goods, including semiconductors and medical supplies.

As a result, countries and companies are considering how to de-risk their supply chains, and make themselves less vulnerable or over-reliant on single trade relationships, while economic coercion fears have also grown.

A means for governments to assist those impacted by economic coercion may be included within the upcoming G7 statements, said Akari Igata, a project lecturer at the University of Tokyo and expert on economic security policy, but noted that the details remain to be seen.

China, which is the largest trading partner for many major economies, is documented as increasingly using economic coercion a tactic.

Beijing, for instance, placed import tariffs on Australian produce in 2020, including wine and coal after then-Prime Minister Scott Morrison called for an independent inquiry into the origins of the coronavirus. In 2021, China also blocked trade with Lithuania after Vilnius and Taipei announced plans to open respective representative offices.

A 2020 report by the Australian Strategic Policy Institute (ASPI) recorded 152 cases of coercive diplomacy used by the Chinese Communist Party over the past 10 years, with a “sharp escalation” since 2018. Because coercive diplomacy isn’t well understood, countries and companies have “struggled to develop an effective toolkit to push back against and resist it,” the ASPI report said.

Officials from the G7 nations are increasingly expressing a desire to combat this tactic.

Earlier this month, Yasutoshi Nishimura, Japan's minister of economy, trade and industry, singled out economic coercion as a risk during a speech in Paris saying that such tensions had led to a crossroads and required acknowledgment of the risks and development of stronger supply chains with like-minded countries.

“Economic coercion, such as China's suspension of Taiwanese pineapple imports, the suspension of Australian wine imports, and even the suspension of Lithuanian beef imports, is a real danger,” he said.

In March, U.S. Ambassador to Japan Rahm Emanuel published an anti-coercion coalition paper detailing China’s use of the tactic labeling this a growing challenge, and stating that “the current international response is lacking.”

At present, U.S. congress is considering an anti-economic coercion act that would authorize the president to “assist foreign trading partners affected by economic coercion and penalize foreign adversaries.” Washington views economic coercion as a threat to national security and a rules-based order.

The Japanese government has been active in helping the private sector diversify its supply chains, offering subsidies to ensure stable supplies of critical materials.

While China’s state media has said economic penalties are completely disconnected from sudden trade blocks, officials have also accused the U.S. of deploying the same tactic.

“If any country should be criticized for economic coercion, it should be the United States. The U.S. has been overstretching the concept of national security, abusing export control and taking discriminatory and unfair measures against foreign companies. This seriously violates the principles of market economy and fair competition,” China’s Foreign Ministry spokesperson Wang Wenbin said last week.

While China’s deployment of economic coercion has been calculated to choose areas where it hurts its enemies but not its own interests, Igata said, some economists are skeptical of the effectiveness of economic coercion at all, with this leading to a ‘musical chairs’ effect where countries switch suppliers, rather than lose access to goods.

One consideration for the G7 and other like-minded countries could be to collect information surrounding their own supply chain vulnerabilities in addition to China’s trade reliances on them to develop a comprehensive map of China’s dependencies, Igata said. He noted just having this shared information could help deter the use of economic coercion as a tactic.

David Lawrence, a research fellow at Chatham House, said while diversified supply chains with less dependency on a small number of ‘choke points’ may be a theme, “complete decoupling between the West and China is not achievable or particularly desirable for G7 countries, but greater diversification is likely.”

“This could benefit places like India and Southeast Asia, which have growing technology sectors and critical material inputs, but are not aligned with China,” Lawrence said.