Editorial: Apec could not reconcile US and China

Leaders pose for a family photo before the start of activities at the APEC 2018 Economic Leaders Meeting at the APEC Haus at Port Moresby. Photo / AP

Seldom has the annual gathering of Asia-Pacific economic co-operation (Apec) been the platform for as much geopolitical grandstanding as seen at Port Moresby at the weekend.

China's President Xi arrived in the Papua New Guinea capital to open a school and road funded by his Government and to defend China's "belt and road" infrastructure programme around the world.

United States Vice-President Mike Pence came to warn smaller countries that China's "opaque" loans would turn out to have strings attached, describing the rival power's programmes as a "constricting belt" and a "one-way road".

The US is not alone in its concerns about China's intentions. Australia and New Zealand have put extra efforts and money into their own assistance programmes in the region over the past year and, together with the US and Japan, they gave PNG an undertaking at the weekend to extend its electricity supply to 70 per cent of the impoverished country by 2030.

But that should not be seen as unequivocal siding with the US in its rivalry with the world's next-largest and fastest-growing economy. China's power gives rise to fears that can easily be exaggerated. At Apec New Zealand Prime Minister Jacinda Ardern usefully drew reporters' attention to OECD figures showing that in the five years to 2016, only 10 per cent of aid to PNG came from China; well over half (62 per cent) came from Australia.

The more immediate concern to smaller trading nations has to be the current US Administration's threat, real or implied, to the World Trade Organisation. For the first time Apec leaders have failed to agree on a communique from their meeting and the reason is said to be that the US wanted them to call for wholesale reform of the WTO.

China was not the only member to baulk at that demand. The host Prime Minister, PNG's Peter O'Neill, explained, "Apec has got no charter over the World Trade Organisation. That's a fact."

The Trump Administration believes China has failed to observe WTO rules since its admission to the organisation and accuses it of forced technology transfer and breaches of copyright. But rather than make the effort to help apply those rules, the US seems determined to emasculate the organisation and replace it with something more amenable to the doctrine of America First.

Meanwhile, the US suspects China harbours an ambition to rewrite global trade rules for its own purposes, a project which, if true, would be assisted by President Trump's withdrawal from the Trans-Pacific Partnership recently ratified by New Zealand and other Pacific Rim countries. China has been promoting a Regional Comprehensive Economic Partnership of 16 Asian countries.

Many an international exercise is being held back by US President Donald Trump's determination to renegotiate just about every agreement the US has made. The failure to agree on an Apec communique is not a disaster in itself, they are seldom ringing declarations of progress.

But at the very least a communique represents a willingness to work together towards something worthwhile. Even that seems beyond agreement when the US comes to lock horns with China, threaten it with more tariffs and keep America First.