The annual Group of 7 Summit officially begins on Friday, in Hiroshima.

Leaders from seven industrial democracies will meet to discuss the future of world relations and economics. The world is facing a number uncertainties, including growing geopolitical tensions and central banks fighting rising inflation.

The countries that were invited to the meeting are also in the spotlight, including Australia. Brazil, India. Indonesia, South Korea and Vietnam. These nations have pivotal roles to be played in regional alliances, as the rift growing between Washington and Beijing continues.

Leaders are expected to gather in Hiroshima. The Japanese city was devastated by the U.S.’s first atomic weapon used in World War II, which killed thousands of civilians.

This week, nearly eight decades after the founding of the city, world leaders will gather to discuss international trade and security in the context of the U.S.-China rivalry for influence, amid fears about their decoupling and the ongoing war in Ukraine.

The Group of 7 which was formed to discuss policies for dealing with economic crises during the 1970s meets at a critical time of slowing growth globally amid rising inflation.

Last week, G-7 finance leaders met with central bankers for a three-day summit in Niigata. They promised to fight rising costs and make sure expectations about future price movements remain “well-anchored.”

Mireya Solis, director of East Asia policy studies at the Brookings Institute, said on a recent podcast that she was increasingly concerned about a conflict between the United States and China.

Solis said, “These superpowers are on the nuclear issue. Therefore, I believe that Hiroshima is a very poignant example of why we need to address these problems and avoid a similarly disastrous outcome.”

Ukraine-Russia conflict

Volodymyr Zelenskyy, the Ukrainian president, will also be attending the summit. He is scheduled to attend virtually.

Hiroshima is also expected to announce additional sanctions against Russia.

Jake Sullivan, U.S. national security advisor, told reporters aboard Air Force One that there would be discussions on the current state of sanctions and what the G7 countries will do collectively to enforce them.

He said that he would focus his efforts on “closing loopholes and evasion networks to ensure that the impact of the sanctions is magnified over the coming months.”

He told reporters that “the U.S. would have a package associated with the G-7 declaration which will focus on this enforcement issue.”

In April, EU Commissioner for Financial Stability Mairead McGuiness said that the EU is in discussions about a new wave of sanctions that would cut off Russia from technology and finance to “reinvent their war machine”.

The G-7 leaders may discuss the invasion of Ukraine by Russia during their trilateral summit, which will take place on the fringes of the G-7 meeting.

The Kremlin was furious with the South Korean President Yoon Suk Yeol after he suggested in a Reuters’ interview that he might be open to military assistance to Ukraine.

The three leaders will discuss a closer security co-operation, including a stronger nuclear deterrence following the escalating provocations by North Korea.

One eye on China

Analysts told CNBC that China also positions itself as a mediator, as the tensions between Ukraine & Russia continue to be a “daunting” challenge for Beijing.

China has this week released disappointing data that was expected to indicate a more substantial recovery following its Covid restrictions.

Nomura, for example, has downgraded its forecast of the full-year economic growth for China from 5.9% to a more conservative 5.5%.

Ting Lu, Nomura’s chief China economist, wrote: “As disappointment sets in, we are seeing a growing risk of slower growth, higher unemployment, persistent deflation, declining market interest rates and a weaker dollar.”

The downgrade was attributed to “weak consumer confidence and weak business investor confidence”.

Tensions are rising

The geopolitical tensions between China and the U.S. have a negative impact on China’s economic growth prospects, as well as causing concern over global supply chains.

Joe Biden, the U.S. president, is expected to issue an executive order that will limit U.S. companies’ investments in China.

Treasury Secretary Janet Yellen said to reporters at the G-7 Meeting of Finance Ministers and Central Bank Governors that the U.S. was looking at measures in order to counter China’s “economic coercion”.

Biden confirmed he would be meeting with his Chinese counterpart Xi Jinping soon, but did not provide a timeline for when the meeting would take place.

He said, “Whether it is soon or not, we will meet,” in response to a query about his plans to visit Xi.

An official at the White House said that the meeting would be best held in person and officials are actively evaluating if it could happen before the year’s end.