Why the G7 Summit Matters More Than Ever for Business

Led by Japan, this year's Group of Seven (G7) Summit, held May 19 to 21, underscored the group’s renewed relevance as a key coordinating body to address the world’s biggest challenges.  

The war in Ukraine, China’s expanding economic and military capabilities, and the shadow of the COVID-19 pandemic have compelled G7 leaders to undergo a deeper assessment of their economic vulnerabilities, and take strong steps to address them.  

When heads of state first met at the inaugural G7 in 1975, they vowed to ”overcome high unemployment, continuing inflation and serious energy problems.” This year’s G7 Summit in Hiroshima produced broad consensus on a staggering list of issues and yet at its core, the G7 remains about industrial democracies charting “steady and lasting” growth. Recent shocks to the global system have given governments a stern reminder that only in partnership with business can they deliver to societies a robust and resilience economic recovery.  

G7 decisions are underpinned by exhaustive whole-of-government consultations, reports, and private-sector input. This year, decisions made by the G7 will impact how countries set aside funding for pandemics, finance infrastructure in the Global South, approach AI and cross-border data, address heavily indebted countries, and structure trade and investment with China. And that is just the first tier of G7 work. 

In the leadup to the Summit, the business federations of the G7 nations gathered in Tokyo for the B7 Summit and issued recommendations, some of which we were glad to see reflected in the final G7 Joint Communique.  

Who attended the G7 Summit? 

The Group of Seven consists of leading industrialized democracies: the United States, United Kingdom, Canada, Germany, France, Italy, and Japan. Two representatives of the European Union also participated as did the Managing Director of the International Monetary Fund (IMF). This year, Japanese Prime Minister Fumio Kishida also invited the leaders of Australia, Brazil, Comoros as the rotating Chair of the African Union, Cook Islands, India, Indonesia, South Korea, and Vietnam. On the Summit’s final day, Ukrainian President Volodymyr Zelensky joined discussions to drive support for his country’s ongoing war efforts against Russia. 

What was discussed?

China: The G7 Joint Communique notes specifically that economic “decoupling” from China is not a G7 goal. The leaders rather emphasized “de-risking and diversifying” to strengthen economic resilience and reduce “excessive dependencies in our critical supply chains.” The G7 stresses that it seeks “sustainable economic relations” with China and that its policies are not designed to harm the world’s second biggest economy. However, the G7 this year notably issued stronger-than-ever criticism on several areas of concern, including a pledge to counter “malign practices, such as illegitimate technology transfer or data disclosure,” and set up a mechanism to jointly deal with economic coercion.  

Economic Security: The G7 leaders unveiled the communique “Coordination Platform on Economic Coercion,” which provides a new framework to better assess, deter, and respond to the use of punitive trade and economic practices to advance political objectives. Under the initiative, participating countries will use “early warning and rapid information sharing” and explore coordinated responses. The leaders also shared that measures to address risks from outbound investment “could be important to complement existing tools of targeted controls on exports and inbound investments.” 

Energy Security and Climate: The G7 leaders said they need to “significantly accelerate” the deployment of renewable energies and the deployment of next-generation technologies to achieve net-zero emissions by 2050. They encouraged development and use of low-carbon and renewable hydrogen and its derivatives, such as ammonia, particularly in energy-intensive sectors that are difficult to decarbonize – like transportation and heavy industry. 

Acknowledging the need to move away from Russian energy dependence, the G7 leaders expressed support for public investments into the gas sector as a “temporary response.” The U.S. Chamber supports the role of natural gas in ensuring global energy security while simultaneously advancing our shared climate goals. 

Infrastructure: Importantly, the G7 leaders provided an update on their “Partnership for Global Infrastructure and Investment” (PGII). Launched in 2022 as an alternative to China’s Belt and Road Initiative, the PGII aims to mobilize $600 billion in private and public global infrastructure investments in developing countries by 2027. The United States has thus far mobilized $30 billion through grants, federal financing, and private sector investments, and will look to launch an annual investor forum to enable the U.S. government to better “de-risk capital” and “play a matchmaking role between investors and opportunities.” 

AI and Advanced Technologies: The G7 leaders called for international standards of artificial intelligence and other advanced technologies, acknowledging that governance has not kept up with the rapid pace of changes. Governance of the digital economy, G7 leaders said, should reflect the G7’s shared democratic values, like fairness, transparency, safety, and respect for human rights and privacy. The leaders also unveiled the “Hiroshima AI Process” working group and directed relevant ministers in G7 countries to collaborate on AI-related topics such as disinformation and intellectual property rights. The group will be launched by the end of the year. 

Beyond 2023 

While immediate challenges such as the resilience of shifting value chains, recovery from the COVID pandemic, and major economic shifts due to climate and technology are on the G7’s front burner, the yearly G7 Summits also give leaders the opportunity to explore the longer-term growth potential of our economic models. In addition to navigating the unfolding energy transition and digital transformation, the leaders must also consider fiscal overstretch, blunt macroeconomic tools, the necessity of much more resilient supply chains, growing global health risks, disaster response, and a popular distrust of governments and science following the COVID-19 pandemic. 

One of the most consequential long-term projects of G7 members is achieve consensus on a better way of measuring our economies that would take into account the true economic well-being of the people. The G7 has tasked the OECD, UN, IMF, World Bank, and the European Commission to improve the way we measure the wealth of nations in four areas:  

1. Capture the advancements on the digital economy and the value of data as a good, which is highlighted by the current burst of new AI investment and applications. 
2. Capture the shifts in our demographics and work-family balance and capture the value of household activities. 
3. Better measure the distribution of income, consumption, and wealth between households, which should be able to ground the discussions of inclusive growth in shared metrics. 
4. Agree on how to measure natural resources and their depletion in each economy as a vital yardstick of its sustainability.  

The importance of such G7 work is clear – we must measure what we create. It is the unique role of the G7 to bring forth consensus on top-level vision and steer members to do their part in attaining the goals. The G7 Summit in Hiroshima was another success of democratic governments seeing eye-to-eye on present and future risks with the understanding that their capacity to deliver is subject to vibrant markets, consumer confidence, and innovation. It is our job to ensure that governments implement their goals in ways that allow businesses to contribute and thrive.  

About the authors

Gary Litman

Gary Litman, senior vice president of Global Initiatives at the U.S. Chamber of Commerce, is responsible for the Chamber’s policy advocacy for the economic reform agenda of the G20, G7, and international institutions. He leads the Chamber’s participation in a range of global business coalitions and related business summits focused on sustainable economic policies.

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