G-7 to Call on China to Stop Helping Russia’s War in Ukraine

(Bloomberg) -- Group of Seven leaders will call on China to stop enabling and sustaining Russia’s war against Ukraine, according to a draft statement seen by Bloomberg.

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Kyiv’s allies are accusing Beijing of providing Russia with technologies and parts — either found in weapons or necessary to build them — aiding Moscow’s efforts to get around wave after wave of G-7 trade restrictions on many of those goods. Banned materials often get to Russia through third countries such as China and Turkey or networks of intermediaries.

“China’s ongoing support for Russia’s defense industrial base has significant and broad-based security implications,” says the draft statement, which could still change before it’s agreed by leaders at a summit in Italy due to start Thursday.

A spokesperson with the Chinese Ministry of Foreign Affairs responded to the draft to say that China did not create the Ukraine crisis nor is it party to the conflict.

“The G-7 should take pragmatic responsibility to promote the easing of the situation and create conditions to solve the political crisis, rather than making groundless accusation towards a non-party to the conflict,” the spokesperson said in a statement to Bloomberg.

As part of efforts to counter the circumvention of sanctions, the G-7 and the European Union are expected to introduce new restrictions in the coming days, Bloomberg previously reported.

Measures under discussion include listing more companies, targeting banks in third countries that are facilitating the trades, demanding that companies ramp up checks on their subsidiaries and sub-contractors abroad, and expanding restrictions on western-branded goods that are still ending up in Russia.

The G-7 will also call on Beijing to push Russia to withdraw from Ukraine and support a just peace.

Trade tensions between G-7 countries and China will feature in the statement more broadly. The leaders are expected to say that China’s policies “are creating global spillovers, market distortions, and harmful overcapacity in a range of sectors,” according to the draft.

The G-7 will affirm their ongoing efforts to reduce critical dependencies on China, while reiterating that they are not intent on decoupling.

“We are not trying to harm China or thwart its economic development, indeed a growing China that plays by international rules would be of global interest,” the draft reads.

The discussion comes as trade tensions between the West and China are on the rise, with the EU due to confirm this week that it will impose tariffs on electric vehicles from July and Beijing expected to retaliate.

In another move aimed at China, the G-7 are aiming to launch a mechanism to better monitor non-market practices as a way to improve information sharing and set the ground future cooperation on the issue, according to the draft.

G-7 officials are also still working to finalize details on how to use the profits generated by frozen sovereign Russians assets, which they hope will be one of the summit’s main outcomes.

--With assistance from Foster Wong and Philip Glamann.

(Adds another nugget from draft communique.)

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