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Greetings from Hong Kong, where we rang in the Year of the Ox this week without festivals or fireworks. Still, there was reason to cheer: over the holiday, the number of new daily coronavirus cases in this city of 8 million dropped into the single digits. The government today began relaxing social distancing restrictions on restaurants, bars, gyms and public beaches, easing a three-month lockdown. Hooray!
U.S. President Joe Biden promises to put fighting the pandemic, reviving the global economy, and coping with a rising China at the top of the agenda at tomorrow’s virtual gathering for leaders of the “Group of Seven” rich democracies. So says the White House in a statement released Wednesday.
The meeting, Biden’s first G7 event since assuming the presidency, offers the U.S. leader a chance to reassure counterparts he means to abandon Donald Trump’s “America First” approach to diplomacy in favor of multilateral policies that focus on working with allies to increase pressure on China. Biden has identified China, the world’s second-largest economy, as America’s “most serious competitor.”
During the virtual conclave, Biden will “discuss the need to make investments to strengthen our collective competitiveness and the importance of updating global rules to tackle economic challenges such as those posed by China,” the statement said.
Chinese leaders, unsurprisingly, have bristled at the prospect of being lumped together with the virus and global recession as the G7’s common foe. “We oppose group politics based on ideological divides, forming exclusive cliques, and imposing the will of a minority group of countries over international society,” the Chinese foreign ministry said Tuesday.
The G7 nations are: Canada, France, Germany, Italy, Japan, the United Kingdom, and the U.S. Boris Johnson, the prime minister of this year’s host nation, the U.K., has invited leaders from Australia, South Korea, and India to join as guests, creating a “D-10” coalition of democracies. The idea, British diplomats say, is to present a united front of nations with shared values determined to contain the virus and also agree on a joint strategy for dealing with China.
Last week, at a “sherpa” meeting for senior diplomats preparing for Friday’s video conference, delegates from the U.K. proposed that the group sign an “Open Societies Charter” promoting democratic values and human rights.
Not all G7 nations are keen on confronting China so publicly. Bloomberg, citing a leaked diplomatic cable, reports that the government of Japanese Prime Minister Yoshihide Suga “pushed back strongly” against the idea of inviting Australia, India, and South Korea. The forum’s three European members also expressed misgivings that the U.K.’s proposal to create a D-10 risks transforming the group into an anti-China platform—or, worse, creating a Cold War-style standoff between rival blocs of democracies and authoritarian states.
The notion of expanding the G7 was proposed by the Trump administration last year (although Trump wanted to include Russia as well). Biden hasn’t said whether he supports the idea, nor has he explicitly endorsed Britain’s call for an Open Societies Charter. But Biden has often advocated convening some kind of summit of democracies.
Meanwhile, Biden administration officials have clearly signaled their enthusiasm for a separate, smaller multinational forum first proposed by Trump. That grouping, focused on the Indo-Pacific, is called the Quadrilateral Security Dialogue (a.k.a. “the Quad”). It includes Australia, India, Japan as well as the U.S. and is often described as a “mini-NATO” designed to counter China’s growing power in the Asia-Pacific.
National security adviser Jake Sullivan said last week that the White House sees the Quad as “fundamental, a foundation upon which to build substantial American policy in the Indo-Pacific region.” Biden and Indian Prime Minister Narendra Modi agreed in a phone call earlier this month to strengthen Indo-Pacific security through the Quad. The State Department announced that Antony Blinken will meet virtually with his counterparts from the other three countries for the first time today.
And yet Kishore Mahbubani, who served as Singapore’s permanent representative to the United Nations, argues in a recent essay in Foreign Policy that efforts to contain China by bolstering the Quad are doomed to fail. The reason? The four member nations, whatever their specific disagreements with China, have radically divergent geopolitical interests and vulnerabilities. Australia and Japan, he asserts, are far too dependent economically on China to risk a protracted standoff with Beijing, while India maintains an official policy of non-alignment and is growing far too slowing to keep pace with China’s expanding geopolitical might.
Getting four countries to cooperate to counter China will be a challenge, let alone seven or ten.
More Eastworld news below.
Clay Chandler
clay.chandler@fortune.com
This edition of Eastworld was curated and produced by Grady McGregor. Reach him at grady.mcgregor@fortune.com.
Eastworld news
Cancelled
Protesters in Myanmar have turned against China. The protesters, which have been demonstrating against the government since the military’s Feb. 1 coup, are accusing China of aiding Myanmar’s government in its Internet crackdown and are now calling for boycotts of Chinese goods. China is Myanmar’s largest trading partner and has not condemned Myanmar’s coup as harshly as governments like the U.S., Europe, and Japan. Financial Times
Blocked
Facebook blocked users in Australia from finding or sharing news on its platform on Thursday, preventing the public from accessing critical information regarding the government’s health and emergency services. The episode marks a major escalation in an ongoing fight between Big Tech and Australia’s government, which has proposed legislation to require platforms like Facebook and Google to pay news publishers for sharing their content. Google opted to strike a deal on Wednesday with Rupert Murdoch’s News Corp for sharing content in Australia. Fortune
Expelled
China is richer and more powerful than ever before, but the number of foreign journalists left to cover the country’s developments keeps dwindling. In recent years, dozens of foreign journalists have been expelled from China, gutting the bureaus of major outlets like the New York Times, the Wall Street Journal, and The Washington Post amid rising tensions between the U.S. and China. Experts say the lack of quality information and reporting from China may work to further undermine understanding of China in the West and relations between China and the rest of the world. The Wire China
Replaced
A week after Yoshiro Mori resigned from his post as head of Japan’s Olympic committee for sexist remarks, Japan is replacing him with a woman. Seiko Hashimoto, a government minister and former Olympic medalist, will take the reins of an Olympics that was delayed amid the COVID-19 pandemic and is now set to open on July 23. Japanese officials insist that the country plans to hold the Olympics amid some calls domestically and abroad to cancel the Games entirely. New York Times
Better-than-expected
This week, Japan’s benchmark stock index the Nikkei Stock Average crossed 30,000 points for the first time in over three decades signaling that investors are confident about the prospect of COVID-19 vaccinations driving a continued economic recovery. On Monday, Japan’s Central Bank also posted better-than-expected economic data, reporting that the country’s economy grew 12.7% on an annualized basis in the last quarter of 2020. Japan’s economy has now returned to 2019’s pre-COVID levels. Nikkei Asian Review
Coronavirus by country
Indonesia
In what is likely the world’s first government-mandated COVID-19 vaccine program, Indonesia’s government said on Thursday that it may punish people who refuse to get vaccinated, explaining in a revised government rule that those who decide against getting vaccinated may get fined or be denied other government services. In September, a survey found that 65% of Indonesians wanted to get vaccinated, while those who voiced opposition cited concerns about the health risks of the vaccine and its potential cost. Indonesia has so far administered 1.7 million doses of China's Sinovac vaccine to its citizens free of charge, and plans to inject 180 million vaccine doses by the end of 2021. Bloomberg
Markets and movers
Baidu – The Chinese search engine giant beat quarterly expectations on Wednesday, posting a 5% increase in revenue in the fourth quarter of 2020 to $4.69 billion. The results come on the heels of Baidu’s new partnership with automaker Geely to set up a new smart electric vehicle company. Reuters
JD Logistics – The logistics division of the e-commerce giant JD.com filed a prospectus for a Hong Kong IPO on Tuesday at a proposed valuation of $13.9 billion. JD Logistics is now set to become JD’s third publicly-traded company following JD.com and JD Health, a health care affiliate that debuted in Hong Kong in 2020. Caixing Global
Bytedance – The video streaming giant is exploring a sale of its TikTok operations in India to Indian rival Glance. The deal, which is in early stage discussions, may allow TikTok to skirt the Indian government’s ban of the app. Deal Street Asia
Sinovac – The Chinese drugmaker's COVID-19 vaccine was approved for emergency use in Hong Kong on Thursday, and the city expects to kickstart its vaccination drive as early as Feb. 26. Sinovac’s vaccine is now being deployed in places across Asia, South America, and Europe, but the vaccine maker has yet to publish publicly-available phase III clinical trial data. South China Morning Post
Tata Group – The Mumbai-based conglomerate will purchase a 68% stake in Indian online grocer BigBasket for $1.31 billion, according to a report in local Indian media. The deal would make Tata Group more competitive in its plans to launch a new e-commerce app and compete with the likes of Amazon and Reliance Industries. Reuters
Treasury Wine Estates – The Australian winery announced a 43% drop in revenues in the first half of its fiscal 2021, reflecting China's decision to impose 172% tariffs on imported Australian wine. Treasury Wine Estates, the world's third largest winemaker, said it expects weakened demand to continue while China's tariffs remain in place. Fortune
Final figure
$127 billion
In January 2020, Chinese New Year began like any other year, but ended in a near country-wide lockdown as COVID-19 began to spread throughout the country and outside its borders. This year, government efforts to discourage travel dampened some of the holiday’s normal economic benefits, but consumers are showing signs of returning to their pre-pandemic celebratory spending. In 2021, Chinese consumers spent $127 billion on shopping and dining during the holiday, up from $98 billion in 2020 but down from the $154 billion consumers spent in 2019. South China Morning Post
