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APEC 2018 was a failure because of US-China tension

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Pence Abe Apec
Japan’s
Prime Minister Shinzo Abe (L) and Brunei Sultan Hassanal Bolkiah
(R) talk to US Vice President Mike Pence at a family photo during
the Asia-Pacific Economic Cooperation (APEC) Summit in Port
Moresby on November 17, 2018.

SAEED
KHAN/AFP/Getty Images


  • A major Asia-Pacific summit’s failure was down to “deliberate
    protectionism” and “excusing” by “individual economies,” China’s
    foreign ministry spokesperson said in a statement on Monday,
    using loaded language aimed directly at the United States.
  • For the first time since its inception back in 1993, a
    leaders’ communiqué has not been issued after the annual Asia
    Pacific Economic Cooperation (APEC) meeting and it’s really all
    because of the US and China.
  • China-US ties are on a downswing following the failed summit
    in Papua New Guinea, and ahead of a critical G20 meet at the end
    of the month.
  • A day after US Vice President Mike Pence accused China of
    seeking to “drown our partners in a sea of debt,” the world’s two
    great powers simply refused to reach out over the wording of bits
    of the proposed APEC communiqué.
  • But the truth is things between the US and China were heading
    south long before the summit started and don’t bode well for a
    Trump-led trade war rapprochement anytime soon.

It was a summit to help sort out the Pacific’s problems, but,
in the end, it was all about the lingering spat between two of
the world’s most-powerful nations.

At the start of November, with US President Donald Trump and
Chinese President Xi Jinping injecting a little optimism into a
bilateral relationship that’s been at its lowest ebb in
decades, unfortunately it now seems resolving US-China trade
differences ahead of a possible face-to-face at the G20 meeting
in Argentina looks pretty distant.

The weekend’s Asia-Pacific Economic Cooperation (APEC) summit
in Port Moresby was one of open hostility, bilateral acrimony,
and big-brother posturing over which giant would make the
stronger regional partner.

The ill will spilled over into what was now a historic APEC
summit for all the wrong reasons.

The annual meeting, this year held in the New Guinean capital
of Port Moresby, ended in disarray and a little chaos when a
belligerent contest between the two dominant powers ensured
that, for the first time, there was no consensus communiqué for
the 21 national leaders to walk away with.

That failure was “by no means accidental,” the Chinese
government foreign ministry spokesman Wang Yi said in his
weekly comments posted on the foreign ministry’s website.

“It is mainly that individual economies insisted on imposing
their own texts on other parties, excusing protectionism and
unilateralism, and not accepting reasonable revisions from the
Chinese and other parties,” Wang said, in a reference to the US
and the disintegration that was APEC’s final hours.

Not only could leaders not meet at a consensus ­position for
the first time in a quarter of a century, but Peter O’Neill,
the prime minister of Papua New Guinea, was bundled out of the
summit in a media scrum and Chinese officials were accused of
pressuring the country’s foreign minister and breaking into his
office.

It is the first time since 1993 that a leaders’ communiqué has
not been issued after the annual APEC meeting.

Giants in the room


Xi Jinping apec
Chinese
President Xi Jinping arrives for a family photo during the
Asia-Pacific Economic Cooperation (APEC) Summit in Port Moresby
on November 17, 2018.

SAEED
KHAN/AFP/Getty Images


O’Neill referenced “the two big ­giants in the room” when asked
why the closing communiqué was not drawn up, amid chaotic scenes.

The unusually tense gathering of Pacific nation leaders in Port
Moresby fell into disarray after speeches from Chinese President
Xi Jinping and US Vice President Mike Pence, fell into
tit-for-tat rhetoric and criticism of their chosen paths to
regional leadership.

The simmering tension between the power rivals boiled over after
Papua New Guinea were presented with a set of significant pledges
from the major competing blocs.

A day after Pence accused China of seeking to “drown our partners
in a sea of debt,” the two regional giants imported their trade
war into APEC, refusing to cede even a few disputed paragraphs in
the proposed APEC communiqué, according to a report in The Australian published
on Monday.

It is understood China refused to agree to US calls for changes
to world trading rules targeting predatory economic conduct and
demanding state-owned enterprises be forced to compete on “a
level playing field” with private businesses.

No surprises where these changes were aimed.

And perhaps no surprises when Chinese officials were reportedly
kicked out of PNG Foreign Minister Rimbink Pato’s office by
security a few hours later as they sought to secure their own
changes to the communiqué.

But the problems really started from the outset, and merely
reached a crescendo when Xi and Pence gave subsequent addresses
on Saturday night.

Xi you in Port Moresby


xi jinping apec
The Chinese
President of the People’s Republic of China, Xi Jinping, speaking
at the APEC CEO Summit, November 17, 2018 in Port Moresby, Papua
New Guinea. Pacific Explorer is one of three Carnival Australia
cruise ships currently providing delegate accommodation and
conferencing facilities to support PNG’s hosting of APEC
2018.

James D. Morgan/Getty Images
for Carnival Australia


Xi had been in Port Moresby since Thursday, last week.

The first generation of Chinese migrants that dominate retail
stores across New Guinea are Fujianese — Xi was governor of
Fujian province from 1999 until 2002, so he comes with perhaps a
better connection to China’s role in Papua New Guinea than most
other leaders.

He has toured facilities on this state visit, written op-eds and
enjoyed the spotlight as the undoubted star of the show.

And he was busy too, as China and PNG signed off on a total of 14
agreements before the summit deteriorated.

About $300 million in soft loans are on the table for PNG prime
minister O’Neill to divvy up, while the Chinese-owned Rabu nickel
mine will also grow to the tune of $1.5 billion.

Other deals range across visa exemptions that allow labor and
education exchanges, economic and technical cooperation,
establishment of a joint economic and trade committee,
strengthening investment and production capacity cooperation,
promotion of trade, a “dry land rice” technical project, further
infrastructure investment, as well as “cooperation in the field
of education, human-resource development and culture and
tourism.”

But it hasn’t been a great public-relations success, however much
money is being splashed around.

Oddly, the Chinese delegation refused local media entry into
President Xi’s meeting with regional leaders on Friday, which set
the tone for an APEC riven by concerns of backroom wheeling and
dealing at the hands of the Chinese.


Xi Jinping China Apec
Officials
prepare a podium for China’s President Xi Jinping during the APEC
CEO Summit 2018 in Port Moresby on November 17, 2018, a part of
the Asia-Pacific Economic Cooperation (APEC)
Summit.

FAZRY ISMAIL/AFP/Getty
Images


A strategic slumber

Meanwhile, the traditional Pacific powers appear to have awoken
from their geostrategic slumber to a new day in the Pacific, full
of challenges presented by what they characterize as China’s
territorial ambitions, couched in rich infrastructure promises
through Xi’s “Belt and Road Initiative.”

After five years of touting, billions of dollars of investment,
and a series of names that failed to articulate its exact
purpose, the still uncertain Belt and Road initiative (One Belt,
One Road or OBOR) is China’s quasi-interconnected network of land
and sea links that purport to open up a trade corridor and at the
least seed Chinese influence through Southeast Asia, Central
Asia, the Middle East, Europe and Africa.

China’s expansive — and expensive — play to gain friends,
partners and customers in the resource-rich Pacific states like
New Guinea have been causing a rising angst among the formerly
influential powers in the region.

Australia is a former colonial power here, as its closest
military ally, the US, while there has been some newfound and
welcome ballast from Japan under Prime Minister Shinzo Abe.

Abe met with the leaders of Australia and New Zealand in the days
leading up to the summit, while Pence was in Japan last week as
Japan tightens its regional bonds, while China becomes more
assertive in the Pacific and the contested South China Seas.

Critics have suggested that while Western countries are bound to
particular standards when it comes to aid, the Chinese state-led
investments and loans have been galvanizing corrupt practices and
leveraging so-called “debt-trap diplomacy.”

For security reasons, Pence originally planned to fly in and out
of New Guinea by way of Cairns, in Australia.

But following the rapid-fire diplomacy on display from Beijing,
the vice president decided at the last moment to stay in Port
Moresby, perhaps with Xi’s dominant performance weighing on minds
in Washington.


Mike Pence APEC 2018
U.S.
Vice President Mike Pence speaks during an informal press
conference at APEC Haus in Port Moresby, Papua New Guinea,
Sunday, Nov. 18, 2018.

AP Photo/Mark
Schiefelbein


A ‘one-way’ road

Certainly, when Pence got up to deliver his address, minutes
after Xi, on Saturday, he spoke his mind on the behaviors of a
rising China in the region.

Pence set out in blunt terms what he saw as the two stark choices
facing Pacific nations caught between China and the Western bloc.

He warned these nations of the dangers of being seduced by the
easy money of China, describing a Beijing that offers struggling
Pacific nations “opaque” loans with strings attached.

China, he warned, is happy to create a “staggering debt burden.”

In a sign of how much Chinese and US relations have deteriorated,
the vice president appeared to openly mock president Xi’s
signature foreign policy in front of a blank Chinese delegation,
suggesting the belt was “constricting” and the road was
“one-way.”

For good measure, Pence drew on President Donald Trump, when he
accused China of having “taken advantage of the United States for
many, many years,” adding: “those days are over.”

That speech was reportedly met with stony silence from the
Chinese delegation, particularly because Xi’s star had reached
its APEC apex moments earlier when he assured the gathering of
regional heads that his One Belt, One Road strategy was obviously
not a debt trap.

Any final agreement on a joint communiqué was done and dusted
when the US sought clauses on China’s predatory trade conduct and
demanded China’s state-owned enterprises compete on a level with
other private businesses.

Power play

Before the summit burst into the latest live battlefront in the
ongoing trade war between the US and China, O’Neill announced
that PNG “invited” Australia, Japan, New Zealand, and the US to
work together on the goal of connecting 70% of its population to
electricity by 2030.

The move represents, along with Australian and US participation
in the development of the Lombrum naval base at Manus Island
port, a key staging facility as part of the counter play offered
by the Western bloc.

Right now, only about 13% of Papua New Guinea’s population has
any reliable access to electricity. Rolling out power promises to
directly raise the living standards of communities in cities,
towns, and remote villages — and is commonly a precursor for the
growth of the private sector and industry.

For its part, Australia is focusing anew on the Pacific after
once again being caught between its strongest ally and its
biggest trading partner.

The Australian Prime Minister Scott Morrison told a press
conference on Monday that the “APEC family” remains committed to
working together, despite the US and China spat.

“If the major powers here are not going to agree, we shouldn’t be
pretending that they do. And we shouldn’t be trying to smooth
that over for the sake of a communiqué, and we should call that
out.”

However, he said there were many areas of agreement, such as the
need to improve digital connectedness and the benefits of
dropping trade barriers.

“We are all still absolutely committed to stronger trading
outcomes because we understand that here in the APEC family we
have been able to reduce tariffs,” Morrison said in a pointed
reference to what is not happening between the world’s two
biggest economies.


Donald Trump and Xi Jinping
Donald Trump and Xi
Jinping.

Carlos
Barria/Reuters


No reason for optimism

China’s foreign ministry spokesperson Hua Chunying reserved a few
words of advice for the US ahead of Xi and Trump’s showdown in
Buenos Aires where the 2018 G20 Summit will be held.

“Our advice for the relevant country is that instead of pointing
fingers at others, it would be better to match its deeds with its
words and truly treat all countries, big or small, as equals,
respect the right enjoyed by other countries to choose the
development path in light of their national conditions and make
substantial contributions to the development of developing
countries.”

Trump and his Chinese counterpart are to meet at the G20 in
Argentina, and hopes had been rising that the two might be able
to seek some way to hit reverse on a trade war in which Xi has
warned their will “be no winners.”

Trump had recently been talking up his personal admiration for Xi
and Tweeted a few weeks earlier of his optimism of an outcome
heading into the G20.

That optimism may be dead in the warm Pacific waters as Xi now
heads to Brunei and the Philippines with a newly appreciative
sense of US regional opposition.

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