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Asia-Pacific Business Asia-Pacific leaders fail to reach consensus as U.S.-China divide deepens

An acrimonious meeting of world leaders in Papua New Guinea failed to agree Sunday on a final communiqué, highlighting widening divisions between global powers China and the United States.

The 21 countries at the Asia-Pacific Economic Co-operation summit in Port Moresby struggled to bridge differences on the role of the World Trade Organization, which governs international trade, officials said. A statement was to be issued instead by the meeting’s chair, Papua New Guinea Prime Minister Peter O’Neill.

“The entire world is worried” about tensions between China and the United States, Mr. O’Neill told a mob of reporters that surrounded him after he confirmed there was no communique from leaders.

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It was the first time leaders had failed to agree on a declaration in 29 years of the Pacific Rim summits that involve countries representing 60 per cent of the world economy.

Draft versions of the communique seen by the Associated Press showed the United States wanted strong language against unfair trade practices that it accuses China of. China, meanwhile, wanted a reaffirmation of opposition to protectionism and unilateralism that it says the United States is engaging in.

The United States has imposed additional tariffs of US$250-billion on Chinese goods this year and Beijing has retaliated with its own tariffs on American exports.

“I don’t think it will come as a huge surprise that there are differing visions” on trade, Prime Minister Justin Trudeau said. “Those prevented there from being a full consensus on the communique.”

The two-day summit was punctuated by acrimony and also underlined a rising rivalry between China and the West for influence in the usually neglected South Pacific, where Beijing has been wooing impoverished island states with aid and loans.

U.S. Vice-President Mike Pence and Chinese President Xi Jinping traded barbs in speeches on Saturday.

Mr. Pence professed respect for Mr. Xi and China, but also harshly criticized the world’s No. 2 economy for intellectual-property theft, forced technology transfers and unfair trading practices. He accused China of luring developing countries into a debt trap through the loans it offers for infrastructure.

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The world, according to Mr. Xi’s speech, is facing a choice between co-operation and confrontation as protectionism and unilateralism grows. He said the rules of global institutions set up after the Second World War such as the World Trade Organization should not be bent for selfish agendas.

Mr. Pence told reporters that during the weekend he had two “candid” conversations with Mr. Xi, who is expected to meet U.S. President Donald Trump at a Group of 20 summit at the end of this month in Argentina.

“There are differences today,” Mr. Pence said. “They begin with trade practices, with tariffs and quotas, forced technology transfers, the theft of intellectual property. It goes beyond that to freedom of navigation in the seas, concerns about human rights.”

The United States is interested in a better relationship “but there has to be change” from China’s side, Mr. Pence said he told Mr. Xi, who responded that dialogue is important.

China’s Foreign Ministry rejected the U.S. criticism that it was leading other developing nations into debt bondage.

“The assistance provided by China has been warmly welcomed by our partners in this region and beyond,” Wang Xiaolong, a foreign ministry official, told a news conference.

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“No country either in this region or in other regions has fallen into a so called debt trap because of its co-operation with China. Give me one example,” he said.

China is a relative newcomer to providing aid, and its loan-heavy, no-strings attached approach has unsettled Western countries that have been the mainstay donors to developing countries and often use aid to nudge countries toward reforms.

In Port Moresby, Papua New Guinea’s capital, the impact of China’s aid and loans is highly visible. But the United States and allies are countering with efforts to finance infrastructure in Papua New Guinea and other island states. The United States has also said it will be involved in ally Australia’s plan to develop a naval base with Papua New Guinea.

On Sunday, the United States, New Zealand, Japan and Australia said they’d work with Papua New Guinea’s government to bring electricity to 70 per cent of its people by 2030. Fewer than 20 per cent have a reliable electricity supply.

“The commitment of the United States of America to this region of the world has never been stronger,” Mr. Pence said at a signing ceremony. A separate statement from his office said other countries are welcome to join the electrification initiative provided they support the U.S. vision of a free and open Pacific.

China, meanwhile, has promised US$4-billion of finance to build the the first national road network in Papua New Guinea, among the least urbanized countries in the world.

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