China-US tensions rattle Apec summit
A deepening tariff war between two world powers has growing implications for the global economy
Port Moresby in Papua New Guinea rarely makes headlines around the world, but that exception to the rule proved indeed to be true as the leaders of Apec, the Asia-Pacific Economic Cooperation group, gathered there over the weekend for a contentious and tense summit. Indeed, it was such a fractious meeting that it broke up without issuing a joint communique on trade and security, and even though the Apec leaders smiled for the traditional group photograph, the underlying tensions belied those platitudes.
As Paul O’Neill, the prime minister of Papua New Guinea noted, the absence of a communique came from “the two big giants in the room”. For the past six months, the United States and China have been engaged in a series of retaliatory measures in a deepening tariff crisis that has implications for the global economy. Whether it be in soya bean products, US software, smart phones or cheap steel and aluminium products, there seems to be no end to these measures in sight, and there are worrying signs that China’s seemingly ever-expanding economy is beginning to slow down a little.
There are indeed implications in this dispute for every other nation, showing just how intertwined and co-dependent the economics of nations have become. And with this tariff dispute between the world’s largest and second-largest economies in the full throes of a trade war, other economies may suffer collateral damage. A slowing Chinese economy means less demand for oil, for raw materials, for minerals such as bauxite that is turned into aluminium, for ores and coals, for goods and for those nations who sent exports there. Certainly, it is in no one’s long-term political and economic interests that this trade dispute continues, but trade concerns, alas, are not the sole issue of contention on display at the Port Moresby summit. There are growing concerns in the region over Beijing’s expansion, development and aggressive assertion that islands in the South China Sea remain in its exclusive purview. Clearly, the nations in the region have alternative interpretations of those claims, and have their own territorial claims there too.
Washington and Tokyo are monitoring the South China Sea dispute closely, and the US has sent a series of naval vessels through the islands to exercise the principle of freedom of navigation and to show that it will not be intimidated nor accept the installation of missile systems on those islands. There is a growing reality that it may well indeed only be a matter of time before these tense confrontations translate into someone ordering the firing of a shot on the ground — a dangerous escalation of this dispute. Given the growing tensions between Beijing and Washington, let’s hope reason will prevail.