Asia Business Channel

APEC Fails because of China and US trade battle

The trade war between the United States and China became evident to the world when leaders from both countries battled with words at the APEC Summit, held in Papua, New Guinea over the weekend. For the first time in the groups history, no final statement was released.

Mike Pence, Vice-President of the U.S. caused tempers to flare among the China delegation when he made critical comments of China’s “Belt and Road Initiative.”

The Vice-President said that the United States offered countries “a better option” for economic partnership and that the United States has a vision for a “free and independent Indo-Pacific.” The Vice-President also said that, U.S. investment is an alternative to China’s BRI and that the U.S. doesn’t saddle countries with debt as China’s BRI loans do.

The Belt and Road Initiative (BRI) has come under increased criticism for leaving some countries deeply indebted to Beijing and saddled with projects that have become white elephants.

• Malaysia has canceled and is reviewing billions of dollars in BRI projects

• Sri Lanka, handed over its $1-billion Chinese-developed Hambantota Port to China on a 99-year lease after it couldn’t meet its debt commitments.

• Vietnam has complained about China’s slow processes, which have delayed projects and made them more expensive and then made Vietnam need to borrow more from China

The Vice President also remarked that China has put up “tremendous barriers” to companies entering its market and he accused Beijing of unfair practices including: “forced technology transfer, intellectual property theft and industrial subsidies on an unprecedented scale.”

Chinese President Xi Jinping gave a keynote address directly before Pence said that countries were now facing a choice between cooperation and confrontation. President Xi said: "Mankind has once again reached a crossroads. Which direction should we choose? Cooperation or confrontation? Openness or closing doors? Win-win progress or a zero-sum game?"

President Xi defended China’s Belt and Road Initiative and said that it was “not designed to serve any hidden geopolitical agenda. It is not an exclusive club that is closed to non-members nor is it a trap as some people have labeled it.”

Other leaders pushed back against the “either or” rhetoric that emanated from Pence and Xi’s remarks.

Scott Morrison, Prime Minister of Australia said: "I know there are legitimate questions around trade arrangements,” he said. “But the solution to perceived unfair trade practices is more likely to be found around the negotiating table than it is in rebuilding a tariff wall. "Our efforts must be about persuading and convincing our peoples again about the domestic benefits (of free trade).”

Lee Hsien Loong, Prime Minister of Singapore said the United States and China need to deal with the specific issues at the heart of their trade dispute and work out practical solutions to those problems,

The Prime Minister also said that tensions between the world’s two largest economies need to be treated as “specified, practical trade issues. Then I think it is possible for the trade negotiators, for the economic ministers on both sides, to deal with the specific issues at hand. Presume good faith and good intentions on the other party and work out practical solutions to those problems,

Chinese President Xi and U.S. President Trump are expected to meet at the G20 meeting in early December and the global trading world is waiting to see whether both leaders will agree to end the trade tariffs and move forward in a constructive manner or whether 2019 will see a continuation or expansion of the U.S. and China’s tariff and trade battle.

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