Isolating China will be ‘impossible and dangerous,’ analyst says, as the G-7 gets tough on Beijing

The G-7 issued its strongest ever message to China over the weekend, but an analyst warned that isolating Beijing is “impossible” and “dangerous.”

The world’s largest seven economies agreed at a summit in Hiroshima, Japan, to de-risk and diversify their supply chains away from China, amid concerns of economic coercion. There has been a growing awareness among western nations that their economies rely heavily on China. The coronavirus pandemic shed light on the intricacies of critical supply chains, but the ongoing war in Ukraine has further exacerbated this reality.

In a joint statement following the summit, the G-7 said: “Our policy approaches are not designed to harm China nor do we seek to thwart China’s economic progress and development…At the same time, we recognize that economic resilience requires de-risking and diversifying.”

In the wake of the G-7 announcement, China summoned the Japanese ambassador and ordered companies to stop buying from American chipmaker Micron.

Giuliano Noci, vice-rector for China for Politecnico di Milano, on Monday told CNBC’s “Squawk Box Europe” that the G-7 showed a “unitarian” perspective against China.

“[President Joe] Biden spoke in terms of de-risking and not in terms of decoupling. Decoupling was the magic word of the United States still a month ago, but it is very clear that, given the role played by the Chinese market for several products, given the level of intertwines among supply chains, it is almost impossible to decouple,” Noci said.

De-risking refers to easing some of the dependencies on China, rather than totally breaking the relationship.

“It should be clear that isolating China will be not only, on the one hand, impossible but also, on the other hand, dangerous,” Noci said.

The shift from the Biden administration perhaps highlights the realization that it would take a great deal of effort and economic pain to separate its economy…