G7 leaders and other EU leaders sit at a session during the first day of the G7 summit at Schloss Elmau, Germany, on June 26, 2022. Photo: AFP

Aiming to keep pressure on Russia and seek solidarity to cope with challenges from so-called systemic rival China, the G7 summit is convening in southern Germany, as leaders of the group including US President Joe Biden began arriving on Saturday afternoon local time. 

According to media reports, leaders of the world's seven most industrialized countries are gathering in the Bavarian alpine resort of Elmau Castle, with the topics of the discussion including a possible cap on Russian oil imports and reaching agreements on banning imports of gold from Russia. 

Biden tweeted on Sunday that "Together, the G7 will announce that we will ban the import of Russian gold, a major export that rakes in tens of billions of dollars for Russia." The US Treasury Department will issue a determination Tuesday to prohibit the import of new gold into the US, which the CNN source said would "further isolate Russia from the global economy by preventing its participation in the gold market."

Xi Junyang, a professor at the Shanghai University of Finance and Economics, said that it is possible the world's two major gold exchange centers in the US and UK will cut gold trading with Russia. 

"Unlike oil and natural gas, Western countries' demands for gold are not rigid, and their sources of gold are much more diversified," Xi told the Global Times, adding that the ban on Russian gold will further raise gold prices and drive up inflation.

But some experts also noted that similar to energy products, Russia could reduce the impact of Western bans by turning to emerging markets to trade gold.

Veteran macroeconomist Tian Yun told the Global Times on Sunday that the new sanctions would have limited impact on Russian's economy, much smaller compared with previous rounds of sanctions. 

According to Tian, against the background of global energy price hike, Russian crude oil has become a "hard currency." Even if Europe, the US or Japan does not buy oil from Russia, other countries will still purchase it. In fact, Western countries' sanctions on Russian oil will only make emerging markets benefit more from energy trading, such as getting discounts from Russian traders. 

He also noted that to curb global inflation by sanctioning such a heavyweight global energy exporter is a totally wrong decision, as one important reason for the current inflation is because the recovery of supply chains is lagging behind the recovery of demand, especially under the liquidity expansion policies of the US and other central banks. 

Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University, told the Global Times that Western countries' idea of putting a cap on Russian oil would be "unfeasible" in reality. 

"As long as the governments allow businesses to trade with Russian exporters, the so-called cap is hard to implement," Lin said. 

According to him, the measures reflect a paradoxical mindset of many Western countries, as they want to punish Russia while also want cheap oil. But this is hard to obtain at the same time.



Sanction harmful to all 

UN chief Antonio Guterres urged Friday to take practical steps to stabilize food markets and reduce commodity price volatility. Guterres said in a video message to a meeting of officials from around the world in Berlin on Friday that "we face an unprecedented global hunger crisis." 

Guterres said there could be no effective solution to the crisis unless Ukraine and Russia, which produce about 29 percent of global wheat exports, find a way to properly resume trade.

Shipments from Ukrainian ports have been halted. Moscow wants certain Western sanctions lifted in order to resume its grain and fertilizer exports. The UN and Turkey are trying to broker a deal, Reuters reported. 

Western powers are grappling with several crises, including surging inflation and energy prices. In the US, inflation has hit 8.6 percent, while the UK has registered inflation of 9.1 percent year-on-year, and in the eurozone, the number has hiked to 8.1 percent, media reported. 

Russian President Vladimir Putin has blasted the West for trying to shift blame for the skyrocketing inflation, saying that it is the result of many years of irresponsible macroeconomic policy of the G7 countries."

Chen Jia, a research fellow at the International Monetary Institute of the Renmin University of China, told the Global Times that the core reason for the EU's high inflation is that in the past years, the US-led world order, particularly geo-politics, is becoming more and more chaotic. 

According to a CNBC report, core inflation excluding food and energy rose 6 percent in May in the US from one year ago. In comparison, core consumer prices in the eurozone excluding energy, food, alcohol and tobacco increased to 3.8 percent in May from 3.5 percent in April, according to tradingeconomics.com. 

Chen said that although the EU's energy inflation had shown signs ahead of the Ukraine crisis, it was after the EU largely slashed energy imports from Russia that the region's energy inflation level surged to an unprecedented level. 

"It's without doubt that the accelerating inflation speed is caused by the energy sanctions after the Russia-Ukraine crisis," Chen noted.

Anti-China agenda

Already having many problems ranging from galloping domestic inflation to a looming food crisis and energy shortages, the US is still promoting its anti-China agenda of seeking bloc politics and camp confrontation against China, and according to the White House on Saturday, the G7 leaders will address "what they see as China's use of forced labor and intellectual property theft and other issues."

The G7 summit and the imminent NATO Summit in Madrid, Spain, would very likely be Biden's last dance in Europe, as the Democrats will probably lose the midterm election in November. Biden is making a final charge to convince and rally European leaders to come onboard the anti-China chariot, Wang Yiwei, director of the Institute of International Affairs at the Renmin University of China, told the Global Times.

The US will exploit topics related to Russia to push for its ultimate goal of containing and competing with China in order to maintain its hegemonic status in the world, Wang noted.

The CNN report spelled out the US' logic as Russia's special operation in Ukraine has amplified Biden's oft-spoken warnings of autocracies versus democracies, and Biden would hope to convince fellow leaders to take a tougher line toward China and make China's "coercive economic practices" a bigger topic of conversation" than during last year's G7 summit.

The US is using political and ideological narratives to abduct Europe, as it has realized its power is significantly waning and it is impossible to take on China on its own in a fair competition, Wang said. 

It is a stark contrast between the confrontation-focused G7 Summit and the inclusive and open BRICS Summit that just concluded and was hosted by China as the group's rotating chair this year, analysts said.

Such differences showcase conflicts of the fossilized civilization of the US-led Western powers and the emerging economies. And it is apparent to all that the Western cold-war mentality is not in line with the times' theme of peace and development, nor with the common will of people, Wang said. 

About 4,000 protesters gathered in Munich as the G7 powers prepared to hold their annual gathering in Germany's Bavarian Alps, local media reported. 

Organizers said they hoped to mobilize up to 20,000 protesters in the Bavarian city and were disappointed by the initial low turnout at Munich's Theresienwiese park, German news agency dpa reported. Their various demands include a phase-out of fossil fuels, the preservation of biodiversity, social justice and greater efforts to combat hunger.