China-U.S. rivalry casts shadow over APEC meeting in PNG

PORT MORESBY (Reuters) – Wide differences between China and the United States dominated an Asia-Pacific Economic Cooperation (APEC) summit in Papua New Guinea on Sunday, with little evidence of consensus as officials struggled to frame a closing statement acceptable to all.

Competition between the United States and China over the Pacific was also thrown into focus with Western allies launching a coordinated response to China’s Belt and Road program, promising to jointly fund a $1.7 billion electrification and internet project in Papua New Guinea (PNG).

Tonga, on the other hand, signed up to the Belt and Road and won deferment on a Chinese loan, a Tongan official said.

U.S. Vice President Mike Pence, as he left the PNG capital of Port Moresby, listed U.S. differences with China, a day after he directly criticized its Belt and Road program.

“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,” Pence told reporters traveling with him.

Differences over trade were making it difficult to draft a summit communique that members would sign, with Chinese officials rebuffed in an attempt to meet PNG Foreign Minister Rimbink Pato on the issue.

Pato confirmed to Reuters that Chinese officials had wanted to see him, adding they had not made “necessary arrangements” for a meeting.

He said the multilateral trade system was the sticking point in drafting the communique.

“If there are last minute issues then, like what we’re doing now, we will talk through them and try and reach a compromise,” he said.

At a Pacific Islands Forum in September, there was a similar dispute when China’s envoy demanded to be allowed to address the forum before the prime minister of Tuvalu.

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APEC host PNG is home to 8 million people, four-fifths of whom live outside urban areas and with poor infrastructure.

The United States, Japan, Australia and New Zealand unveiled a $1.7 billion plan to provide electricity and internet to much of PNG, the first step of a plan that will counter China’s Belt and Road spending and political influence in the region.

The Western allies’ plan would see 70 percent of PNG’s population getting electricity by 2030, from 13 percent now, and was showcased as a demonstration of commitment to the strategically important Pacific region.

China had its success, with Tonga signing up to the Belt and Road and getting a five-year deferral on a concessional loan just before it was due to commence principal repayments.

Chinese President Xi Jinping, who arrived in Port Moresby on Thursday, has been feted by PNG officials and stoked Western concern on Friday when he held a meeting with Pacific island leaders in which he pitched the Belt and Road initiative.

China has poured investment into development projects in the region, including plans to build a large hydropower generation plant in PNG.

The Western plan for PNG comes as diplomatic sources told Reuters that Australia and the United States were concerned about the debt burden that the Chinese plant could have on it.

Belt and Road was first proposed in 2013 to expand land and sea links between Asia, Africa and Europe, with billions of dollars in infrastructure investment from China.

Australia, a staunch U.S. ally, has for decades enjoyed largely unrivalled influence among Pacific island nations. China has only recently turned its attention to the region with a raft of bilateral financing agreements to often distressed economies.

On Saturday, Pence took direct aim at Belt and Road, saying countries should not accept debt that compromised their sovereignty.

China’s foreign ministry responded by saying no developing country would fall into a debt trap simply because of its cooperation with Beijing.

“On the contrary, cooperating with China helps these countries raise independent development capabilities and levels, and improves the lives of the local people,” ministry spokeswoman Hua Chunying said in a statement.

In Port Moresby, Foreign Minister Pato said his country did not need to pick sides.

“For us, we welcome Chinese investment, we welcome U.S. investment. Our foreign policy is to be friends of all, enemies of none.”

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