Aurelia Butler

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It took a murderous invasion of a neighbour by a belligerent, nuclear-armed state and a geopolitical struggle between superpowers to find the G7 a purpose in life — but it got there in the end.The club of rich democracies, which holds its leaders’ summit this month in Japan, has resembled seven countries in search of a common role ever since the global financial crisis elevated the broader G20 to prime position in economic governance. If the war in Ukraine and the US-China conflict mean the global economy is all about geopolitics now, the G7’s time has surely come. Vladimir Putin’s aggression has caused the G7 to band together with other rich democracies including the rest of the EU, Australia and so on and label themselves the “like-minded countries”.But their achievements so far have been impressive rather than decisive. True, they’ve co-operated on imposing trade and financial sanctions on Moscow. But with economies as big as India and China outside the circle, oil and grain smuggling and other circumventions have punched holes in the cordon.And the like-minders are coerced as well as coercers: they have yet to find a way collectively to deter other countries — notably China — from using economic pressure to try to force individual governments into political concessions. Well before the China-US animosity escalated under the presidencies of Donald Trump and Xi Jinping, Japan was acutely aware of bullying from Beijing. In 2010, its electronics producers suddenly found their rare earth mineral supplies from China cut off: this happened during one of the periodic surges in Japan-China tensions over ownership of the uninhabited Senkaku Islands in the East China Sea.

Accordingly, Tokyo has floated the idea of creating a joint G7 approach on anti-coercion. Other countries affected by Chinese bullying are also coming to the summit, including Australia, recently subject to trade blockades after calling for an inquiry into the origins of Covid-19, and South Korea, which faced a Chinese boycott after it deployed US missile systems on its territory in 2016.The idea was amplified in March in a characteristically pugnacious intervention by Rahm Emanuel, the US ambassador to Tokyo and former chief of staff to President Barack Obama, a man who could start a diplomatic incident in an empty room. It was also mentioned in general terms in last month’s G7 foreign ministers’ communique.A truly impressive outcome would be a “Seven Musketeers” mechanism of automatic mutual assistance — all for one and one for all — similar to the “economic Nato” proposed by Liz Truss, ephemerally the UK’s prime minister last year. The principle is interesting, but such a concrete outcome is a very long way off. It will require a degree of political alignment and tactical agreement that does not yet exist. Not all like-minded countries are of the same mind.A senior Japanese official notes, for example, that Tokyo’s instincts are still multilateral. Its response to the China rare earths incident was to join the US in taking a case to the World Trade Organization; its preference for an anti-coercion campaign would be a broad coalition including as many developing countries as possible and operating through multilateral processes.But in the decade since the US brought that case against China, sentiment in Washington has turned sharply against the multilateral route. Emanuel argued that WTO dispute settlement was so slow and bureaucratic that it “undermines rather than reinforces a rules-based system”. Therefore, he concluded, “it is clear that an effective response to [China’s] coercion must be collective and must be led by the United States”.That kind of attitude causes sharp intakes of breath in Europe as well as in Japan, where governments are wary of automatically following Washington’s adventures in geopolitics.Indeed, European governments don’t even necessarily trust the EU’s own institutions to weigh commercial prudence sufficiently against moral principle when it comes to taking on China. The EU’s own new “anti-coercion instrument”, which gives it wide leeway to impose retaliatory measures in trade and investment, gives member states rather than the commission ultimate power over its use.The Japanese official says there are no plans to create a unified G7 anti-coercion instrument, or indeed even for Japan to create a unilateral tool. “The G7 can express common stances against such practices,” the official says. “But it’s difficult to come up with a comprehensive mechanism.”There might eventually be more agreement around policies designed to mitigate coercion rather than retaliate against it. It will be less controversial for the G7 to offer export credit lines and new market openings to compensate, say, Australian companies for the loss of their Chinese customers than to agree counter-sanctions on Chinese exports. But even if this happens, it will not satisfy the US or stop Washington taking unilateral action against China. The US wants a vigilante posse, not a victim support group. It’s easy to assert the principle of countries banding together to resist economic coercion. It’s going to be rather harder to get political consensus around how to do [email protected] More

BDO USA is planning to double the size of its offshore workforce after a slide in the numbers of young graduates becoming accountants in the US.The accounting firm would add thousands of jobs overseas, largely in India, according to chief executive Wayne Berson, amid a worsening talent shortage affecting the US audit and tax businesses.BDO USA, which employs about 12,000 people, is aiming to have 5,000 people at its offshore joint venture “BDO Rise” within five years, Berson told the Financial Times.BDO Rise already has 2,000 people in India and recently added about 100 jobs in South Africa, Berson said, with plans to grow in both countries.“We are seeing a tremendous talent shortage in the profession,” he said. “While it would be nice to just hire domestically, you have got to be open to the notion that maybe someone else has something that you don’t have, that you can buy.”US accounting bosses are wrestling with the question of why interest in the profession has dropped, just as they need to replace a wave of baby boomers who are retiring.The US has never had more than 80,000 graduates with bachelor’s or master’s degrees in accounting annually. But the Bureau of Labor Statistics projects 136,400 new accountants and auditors will be needed annually over the next decade.The Big Four accounting firms — Deloitte, PwC, EY and KPMG — have all established significant offshore presences in recent years, notably in India, to streamline their operations and provide round-the-clock service to clients. PwC US, for example, has what it calls “acceleration centres” in Malaysia, Argentina, China, India, Mexico and the Philippines. Deloitte’s US business employs almost as many people outside the US as it does inside the country.The offshoring trend is also now being embraced by midsize and even smaller firms as the labour market for trained accountants has tightened.US starting salaries for accountants often fail to match up to those available in finance or technology, and the profession also struggles with a reputation for being boring, which trade bodies are trying to overcome with social media campaigns and work in schools.Berson said young people appear more interested in becoming consultants than joining the more stable, but less immediately lucrative, tax and audit professions.“The next generation are wanting to move quickly, wanting to be excited by their job. A lot of them are looking at things like advisory services,” he said.“I was an auditor, how about I told you about audit first? Because I think it’s always better to get your feet wet, get a foundation. You need to hone your skills before you can be a consultant to anyone.”Berson, a native of South Africa, has been chief executive of BDO USA for 10 years, and chair of BDO International — the global network of accounting firms that share the brand — since 2014. Annual revenue for the US firm has grown from $618mn a decade ago to about $3bn, in part through acquiring smaller firms across the US, and Berson predicted $5bn in three to four years, in part by expanding the consulting side of the business.He told the FT that he had “resisted” putting out a return-to-the-office policy in the US, but expected managers to encourage camaraderie and collaboration.“I think the more we see people together in person, the better it’ll be for their career,” he said. “I often get asked about this and I say, ‘we’re not going to have a set policy but if I was in your shoes, I would want to meet with people, I would want to be in the office, I’d want to sit with that partner, go to a meeting with him or her’.” More

Italy plans to hold talks with China about a potential exit from Beijing’s flagship infrastructure investment programme, while seeking to maintain friendly relations and robust commercial ties.Rome was firmly rebuked by Washington and Brussels when it joined China’s ambitious Belt and Road Initiative in 2019, the only G7 country to do so. Prime Minister Giorgia Meloni, during last year’s election campaign, also publicly called the decision “a big mistake”.Meloni said on Wednesday that she had not yet decided whether to terminate Italy’s participation in the signature foreign policy programme of China’s president Xi Jinping. “The debate is open,” Meloni said in Prague.But Italian officials say Meloni’s government would ideally like to find a way to extricate itself from the BRI — without provoking Beijing’s wrath, or being subjected to punishing retaliation. “We want to maintain good relations with them and work to avoid problems escalating,” said one official, adding that Rome did not wish to “antagonise” China.For Meloni, the clock is ticking. Italy’s four-year agreement to participate in the BRI contains an unusual provision for automatic renewal when it expires in March 2024 unless Rome formally notifies Beijing of its intent to withdraw three months beforehand.That gives Meloni — an arch-conservative who is eager to prove her government’s credentials as a trustworthy ally to the US and EU — until December to resolve one of her biggest foreign policy tests, and minimise its diplomatic and economic fallout.“Given the state of relations between the US and China, we cannot remain an ally of the US and at the same time remain in the BRI,” said Stefano Stefanini, Italy’s former ambassador to Nato. “We have to try to negotiate a peaceful — or [the] least damaging possible — exit with the Chinese.”But officials said that US pressure on Italy over the matter had eased recently, as Meloni proved staunch in her support of Ukraine. They also say that open channels of communication with Beijing could be useful in pressing China to push for an end to the war in Ukraine.Italy’s business community, already reeling from sanctions on Russia, is fretting, as it had turned its gaze towards post-pandemic China: Italian exports to China jumped 92.5 per cent in the first quarter of 2023 from a year earlier, mainly driven by a short-term surge of pharmaceutical exports. “A possible withdrawal would lead to a cooling of bilateral relations at a historic moment in which companies and professionals are experiencing a frenzy and a desire to return to the Chinese market,” said Mario Boselli, president of the Italy China Council Foundation, a business association.China’s foreign ministry said it believed that Rome “should continue to tap the potential for Belt and Road co-operation . . . and let the fruits of developing the China-Italy relationship benefit the two countries”.Shi Yinhong, professor of international relations at Renmin university in Beijing, said Rome’s current conundrum reflected “the opportunist approaches” of past Italian governments towards Beijing.

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Rome’s entry into the BRI in 2019 was driven by former premier Giuseppe Conte, of the populist Five Star Movement, as Italy was suffering the effects of a debt crisis. By that time, Italy had already absorbed a series of large Chinese investments into key strategic businesses, including energy and telecommunications. Conte’s successor, former prime minister Mario Draghi, was more wary and used so-called golden powers to block several Chinese acquisitions, including an Italian microchip company and vehicle manufacturer Iveco.Meloni’s government, too, is using that authority to scrutinise the impact of Sinochem, the Chinese state-owned chemical giant, owning a 37 per cent stake in Pirelli, a process that some say could lead to limits on sharing sensitive technologies with the Chinese company. Pirelli declined to comment. Prior to becoming prime minister, Meloni criticised Beijing’s human rights record and wrote that it was “a serious mistake” to treat China as “an equal partner, since it does not play by following the same rules that we follow”. She has also publicly expressed support for Taiwan, the self-governing island that Beijing considers part of its territory.“We don’t have any Chinese weak point, as former governments did,” said Lucio Malan, leader of Meloni’s Brothers of Italy parliamentary group.Meloni’s wariness towards Beijing is shared by much of Italy’s political establishment. Public attitudes towards China also deteriorated, particularly during the pandemic.“The populist government thought that China was the solution to Italy’s historical problems — public debt and the difficulty in making investments,” said senator Enrico Borghi, a member of the centrist opposition party Italia Viva. “In these five years, the awareness of the risks of the BRI has strongly increased,” Borghi said, noting that almost all parties have “abandoned the idea that China could solve Italian problems”.

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For all its heavy political symbolism, Italy’s participation in the BRI brought little progress on the core offer of transport infrastructure. A Chinese state company lost an open tender, worth around €1bn, for a breakwater dam near the Port of Genoa.Given the BRI’s limited economic impact, some analysts believe that Meloni’s best course would be to maintain the status quo and the deal be renewed automatically.“Halting a vague collaboration would make more noise than letting it be renewed automatically”, said Beatrice Gallelli, China researcher at the Istituto Affari Internazionali, a think-tank in Rome.But others say that Meloni needs to send a clear signal in a world of heightened US-China tensions. “Politics is choosing,” said Stefanini. “In Washington, China is as much, or a bigger, priority than Ukraine. She cannot have China and the US at the same time, as difficult as it is.” More

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(Reuters) -Some Bank of Japan (BOJ) policymakers saw the country making progress towards sustainably hitting the bank’s 2% inflation target, a summary of opinions at its April meeting – the first one to be chaired by governor Kazuo Ueda – showed on Thursday.The nine-member board also debated the side-effects of the BOJ’s bond yield control policy and possible repercussions in case it raises interest rates in the future, the summary showed, a sign the members were becoming more open to the idea of a future policy shift.”Japan’s economy is showing signs of achieving a positive cycle of (rising) wages and inflation. The BOJ needs to judge the trend accurately, so its policy response doesn’t end up being behind the curve,” one opinion showed.The members agreed on the need to keep monetary policy ultra-loose for the time being due to uncertainty over the overseas economic outlook and whether recent wage hikes will be sustained beyond next year, the summary showed.At the April meeting, the BOJ kept ultra-low interest rates but announced a plan to review its past monetary policy moves, laying the groundwork for Ueda to gradually phase out his predecessor’s massive stimulus programme.Under a policy dubbed yield curve control, the BOJ sets a short-term interest rate target of -0.1% and caps the 10-year bond yield around zero as part of efforts to reflate the economy and sustainably achieve its 2% inflation target. More