All eyes on China and the US ....
- 1 month ago
Against the backdrop of worsening concerns about the global economy and the future of international trade, world leaders are set to meet for the G20 summit in Argentina, striving to at least reach ceasefires that help contain the worst of the tensions.
It is also a sign of the times that the main focus of the two-day summit on Friday and Saturday is not the event itself, but the bilateral talks on the sidelines expected between the leaders of China and the US.
Just a decade ago world leaders tried to broaden the coalition of decision makers ensuring stability around the world by stressing the importance of a summit that brings together the leaders of the countries that make up 85 per cent of the world's economy.
Multilateralism that was hailed in the wake of the 2008 financial meltdown has been replaced by a return to resting hopes on the largest players, President Xi Jinping of China and US President Donald Trump.
"The G20 has lost a lot of the steam it once had," said Matthew Goodman, an expert on Asian economies and a senior vice president at the Center for Strategic and International Studies.
Goodman notes that this is a "long-term trend" and not a result of the Trump presidency. However, the incumbent in the White House is "making it harder".
Trump has slapped a raft of tariffs on more than $A345 billion of Chinese goods and has threatened to increase the import duties on products from the Asian giant unless Beijing agrees to make fundamental changes to the way it does business.
In particular, the US wants China to make it easier for foreigners to invest, shrink Washington's trade deficit and for the government to crack down on intellectual property theft.
China has retaliated against the US tariffs raising concerns there will be a full-on trade war unless the sides can at least reach a ceasefire soon.
"I think there are some basic things the Chinese side is not willing to compromise on," said Tao Wenzhao, a researcher at the Institute of American Studies, part of the Chinese Academy of Social Sciences.
Two ways in which Beijing might give in are by opening the financial sector to foreign investment and by removing shareholding limits for foreign-invested enterprises, Tao said, but added that there must be "realistic expectations" about what can be accomplished by the G20 talks.
Trump often says that he likes Xi and gets along well with the Chinese leader. It is typical of his personalisation of key strategic relations.
However, Rui Zhong at the Wilson Center's Kissinger Institute on China and the United States, cautions against reading too much into the dynamics between the two big men.
"The Xi-Trump personal relationship has in general not been a good indicator with which to take the temperature of US-China relations," she says.
"There might be some cursory deals made to roll out at the G20 meetings, but the longer term trade tensions will most likely drag on afterwards," Zhong predicted.
When US Vice President Mike Pence was in Papua New Guinea for the APEC summit this month the tensions between Beijing and Washington were bluntly on display.
Pence used the summit to attack China's signature Belt and Road Initiative, calling it a "one-way" road.
At one point, Chinese delegates barged into the offices of the host country, seeking to change the final joint statement.
The Chinese had objected to wording about ensuring trade was fair, language the US and others supported.
In the end, no joint communique came out, for the first time in decades.
More significantly perhaps, it was a rare showing of Chinese aggressiveness in a diplomatic setting that brought back memories of arguments between the US and the Soviet Union.
At the same time, there are signs of mounting muscle flexing by China in the South China Sea and out to the Pacific. The US too is signalling it will defend its positions in the region, in more echoes of the Cold War.
Caught in the middle of the two giants are the smaller countries, such as Papua New Guinea, which rely on both China and the US as donors.
At the APEC summit, Pence's tone was one that made clear: "You need to pick a lane between us and China," said Goodman, the Asia economies expert. And this, he warned, is making governments across the region more anxious.
Indeed, the discomfort extends around the world, amid fears trade tensions between the two largest economies, the so-called G2, will have ripple effects that will cause pain far and wide.