Live. G7 summit: Leaders turn to economy as China Shock 2.0 looms

The April forecast of the International Monetary Fund shows that US GDP growth is expected to outpace that of the other G7 countries in 2026, with growth projected at 2.3% for the United States, compared with 1.5% for Canada, 0.9% for France, 0.8% for Germany and the UK, 0.7% for Japan, and 0.5% for Italy.

These figures come despite the US protectionist trade policy introduced after Donald Trump's return to power in 2025. According to analysts, US companies did not accept lower margins resulting from taxes on foreign components and instead increased investment.

Changes in the US energy market also help explain this growth trajectory, as US shale production has shielded the American economy from the effects of the Middle East crisis.

Meanwhile, EU countries were much more affected by the supply shock triggered by the Iran war and its economic consequences for the Gulf countries.

Let's take another look at the joint statement on geopolitical issues that G7 leaders agreed on overnight.

Towards the end, the text includes one paragraph that touches upon Taiwan: "We highlight the importance of a free and open Indo-Pacific based on the rule of law. We reaffirm our opposition to any unilateral attempts to change the status quo, in particular by force or coercion, in the East and South China Seas and across the Taiwan Strait, which should only be resolved peacefully through dialogue."

This is significant at this moment. Last month, Donald Trump made several comments about Taiwan, a self-ruling island that Beijing claims as part of its territory, that raised speculation about a potential change in Washington's One China policy, which has been a matter of bipartisan consensus since the 1970s. The US acknowledges but doesn't recognise China's claim over Taiwan, leaving the status of the island deliberately undefined. This has often been described as a "strategic ambiguity".

Despite Xi Jinping's attempts to extract new wording from Trump during their bilateral summit in May, the G7 statement indicates continuation with the long-standing stance of Western allies.

Europe is among the regions hardest hit by Chinese overcapacity among the G7 economies.

The US protectionist trade measures have prompted China to reroute exports to the EU, which is being flooded with low-cost products from the Asian giant. Its trade deficit with China has reached a record €1 billion a day.

Shortly after the G7, EU leaders will gather in Brussels for a summit that will partly focus on China. Some officials are urging tougher action against what they describe as China’s unfair trade practices, including the dumping of heavily subsidised goods.

In a non-paper published at the end of May, France, Italy, Spain, the Netherlands, Poland and Lithuania called on the EU to strengthen its trade defence instruments.

"We're not naive anymore. China's five-year plan is an attack on our market," said a senior diplomat. "We have to be firm in our reaction. The cost of action will be less than the cost of inaction."

However, EU member states are not united in taking a hardline stance. Germany has maintained an ambivalent position, even as its trade deficit with China widened, according to data released last December. Spain—another major economy keen to attract Chinese investment—stated after the publication of the non-paper that it did not back it politically.

US President Donald Trump has just turned up at the final day of the G7 talks.

The Republican leader made his Wednesday debut at the Hôtel Royal an hour later than intended, with the working session on "promoting balanced, shared and sustainable economic growth" kicking off at 10:30 a.m. instead of the 9:30 a.m. scheduled start.

Before his arrival, the other G7 leaders and guests could be seen sitting around the table, eagerly waiting.

Trump has a reputation for not totally adhering to the strict timings of the G7 summits, and has, at least twice in the last six years representing Washington, departed the meetings early.

The G7 leaders are working this morning on economic growth under the theme "Promoting balanced, shared and sustainable economic growth", alongside participants from the IMF and the OECD.

China remains the primary concern. Its impact on global growth is growing as Beijing’s export-driven economy, which depends more on external demand than domestic consumption, contributes to global imbalances. China is also accused of unfair trade practices, with the OECD writing in a recent report that it subsidises its products up to eight times more than OECD countries.

Last week, the G7 held a video conference with China to discuss those issues. Participants in the call concluded that some countries produce or export too much, others consume too much and produce too little, while still others save too much without producing enough.

“We need to rebalance all of this, and we must do so because we share the view that these macroeconomic imbalances are dangerous,” an Elysée source said.

After the G7, work should continue on this issue within the G20, which includes China, and with the assistance of the IMF.

China will also be on the agenda of EU leaders during a summit at the end of this week, as the EU’s trade deficit with China has reaches a record €1 billion a day.

As the G7 leaders endorsed a joint statement expressing "unwavering support for Ukraine in defending its freedom, sovereignty, and territorial integrity,” the question remains if Volodymyr Zelenskyy and Donald Trump will have a bilateral meeting in Évian-les-Bains on the final day of the summit. 

There were expectations that the two leaders might meet on Tuesday, but apart from a brief exchange during a working session on Ukraine, no meeting appeared to take place.

Zelenskyy said the conversation was constructive, while Trump for the first time stated that Russia - and not Ukraine - should make a deal.

Ukraine’s state broadcaster, Suspilne, reported that a meeting between the two presidents could take place on Wednesday.

Regarding his agenda, Trump is expected to attend a dinner hosted by Emmanuel Macron at Palace of Versailles on Wednesday evening marking the 250th anniversary of the United States.

Meanwhile, Zelenskyy’s next scheduled engagement appears to be the EU summit in Brussels on Thursday.

The German defence company HENSOLDT and Ukrainian Fire Point have signed a memorandum of understanding to develop a ground-based air defence system capable of detecting and intercepting ballistic missiles.

According to HENSOLDT's announcement, the German company is responsible for the production, testing and supply of radar systems for the missile defence system and will oversee their integration into the system.

Ukrainian company Fire Point will act as the prime contractor and take responsibility for the design of the missile defence system. Fire Point will test and supply its FP-7 missiles, including launchers and system control equipment.

For months Volodymyr Zelenskyy has been calling on European countries to produce their own anti-ballistic missiles. He insisted that Ukraine could produce anti-ballistic missiles for the whole of Europe, but that the delay was currently due to a lack of licences from the US. 

Iran agreed to never produce nuclear weapons in exchange for the lifting of all kinds of sanctions, according to points underpinning the framework agreement with the United States circulated at the margins of the G7.

The points are part of a memorandum of understanding the Washington and Tehran are expected to sign in Switzerland on Friday, and that will need to be finalised with a peace deal within a 60-day window, extendable by mutual consent.

The signature of the memorandum entails an immediate and permanent end to the war on all fronts, including Lebanon, where Israel's intervention against Iran's proxy Hezbolla is still ongoing. The US and Iran would commit to respect each other's sovereignty, reinstate the freedom of navigation in the Strait of Hormuz, remove all types of sanctions currently facing Iran and unfreeze its assets.

The UN Security Council would have to green light the final agreement with a binding resolution.

After last night's joint statement, G7 unity will face a new test today.

The first working session of the third and last day of the G7 summit is a much-anticipated discussion on economic imbalances, with a particular focus on the country that Western allies consider the main culprit behind the crippling phenomenon: China.

Ursula von der Leyen, the president of the European Commission, has warned of a "new China shock" triggered by the glut of low-cost, highly subsidised goods coming from Beijing's state-led economy, which has turned heavily to global exports. Fears of de-industrialisation have gone from abstract to tangible in a short span of time.

While officials admit the grim diagnosis of the problem is widely shared around the table, the prescribed medicine is still under discussion. Europeans will keep an anxious eye on US President Donald Trump, whose stance on Beijing has considerably softened since his much-publicised summit with Xi Jinping in May.

As G7 leaders and Volodymyr Zelenskyy met in Evian to discuss efforts to push Russia toward negotiations, Moscow carried out new strikes on Ukraine.

Russian forces launched at least 119 drones against Ukrainian cities overnight, and 97 UAV’s were intercepted by Ukraine’s air defence forces. 

Late on Tuesday night Moscow also attacked the Southeastern city of Zaporizhzhia, killing one person and injuring at least seven others, regional authorities said.

Regional police said Russian forces directed dozens of Shahed drones toward residential areas of the city.

The attack damaged civilian sites, including homes and part of Zaporizhzhia's National University, according to authorities.

Ukraine’s foreign minister Andrii Sybiha said Kyiv welcomes “the strong G7 statement with new steps to support Ukraine and increase pressure on Russia.”

“G7 once again proves that the world’s strongest democracies stand united with Ukraine and are committed to restoring comprehensive, just and lasting peace for Ukraine.” 

In a post on X he also pointed out at the G7 leaders’ readiness to “take concrete steps toward strengthening Ukraine’s defence capabilities, air defence, and energy resilience, as well as tightening sanctions against Russia.” 

“While Russia shows no willingness to engage in good-faith diplomacy, the available leverage needs to be used to finally bring it to the negotiating table.”

Ahead of this G7 summit, European officials sounded pessimistic about the prospect of releasing a joint statement addressing the wars in Ukraine and Iran, two contentious issues that have often divided the allies, with the United States on one side and the others (the G6) on the other. Last year in Canada, disagreements prevented agreement on common wording for geopolitical matters.

However, momentum began building throughout Tuesday, and negotiators aptly seized the momentum to release a three-page statement on "geopolitical issues" overnight, as we've just reported.

For Europeans, having Donald Trump sign up to a text that promises to increase support for Ukraine and sanctions on Russia is, in and of itself, a major diplomatic victory. The win is particularly sweet for the host, French President Emmanuel Macron, who is taking part in his last G7 summit before leaving office next year.

Credit: Associated Press

G7 leaders are "ready to consider" issuing military production licenses to Ukraine and have agreed to increase arms deliveries, according to a joint statement released yesterday evening.

"We commend Ukraine for its resilience and progress on the battlefield in recent months and emphasise there is now a new momentum. To support and accelerate this new momentum, we agree to increase the delivery of air defence capacities, additional systems and interceptors, and long-range capabilities," the statement said.

"We are also ready to consider extending to Ukraine the benefit of licenses to allow for an increase in Ukraine’s military production."

Kyiv wants to be able to manufacture interceptors for anti-ballistic Patriot systems in Ukraine and Zelenskyy confirmed on Tuesday that he had once again raised the issue with US president Donald Trump at the G7 summit.

The Patriot air defence system remains the only surface-to-air missile system in Ukraine's arsenal capable of countering Moscow's ballistic missile threat. Produced in the United States by Raytheon and Lockheed Martin, Patriot missile systems have become a cornerstone of air defence for many US allies, particularly in the Gulf region, as well as for Ukraine.

G7 leaders adopted a joint statement last night expressing "unwavering support for Ukraine in defending its freedom, sovereignty, and territorial integrity."

The leaders praised Kyiv for the new momentum it has built on the battlefield, and pledged to back it with increased deliveries of air defence systems, additional interceptors, and long-range capabilities.

The recent US-Iran framework deal has added momentum to efforts aimed at constraining Russia’s war-financing capabilities, with leaders pledging tougher sanctions on its energy sector.

The statement commits the G7 economies to backing Ukraine through the coming winter, when Russia has typically targeted the country's energy infrastructure during periods of extreme cold.

It's the third and final day of the G7 summit in Évian, France.

The agenda is lighter today, with just three main events:

• A working session in the morning focused on "Promoting balanced, shared and sustainable economic growth"
• A working lunch about "Ensuring a safe, rapid and effective deployment of artificial intelligence"
• A press conference with the summit's host, French President Emmanuel Macron, in the afternoon

Stay tuned for updates on our live blog!