APEC leaders divided after US, China spat

PORT MORESBY, Papua New Guinea — Leaders from 21 Asia-Pacific nations failed Sunday to bridge gaping divisions at a summit overshadowed by a war of words over the US and China as they vie for influence in the region.

For the first time in the history of the APEC grouping, leaders were unable to agree on a formal written declaration amid sharp differences over trade policy.

"The leaders agreed that instead of a traditional leaders' declaration, they would leave it to the hands of PNG as the chair to issue a chair statement on behalf of all the members," said Zhang Xiaolong, a spokesman from the Chinese foreign ministry.

Canada's Prime Minister Justin Trudeau admitted there were "different visions on particular elements with regard to trade that prevented full consensus on a communique document."

The annual gathering, held for the first time in Papua New Guinea, was overshadowed by speeches from Chinese President Xi Jinping and US Vice President Mike Pence, which appeared to represent competing bids for regional leadership.

Pence warned smaller countries not to be seduced by China's massive Belt-and-Road infrastructure programme, which sees Beijing offer money to poorer countries for construction and development projects.

The "opaque" loans come with strings attached and build up "staggering debt", Pence charged, mocking the initiative as a "constricting belt" and a "one-way road".

He urged nations instead to stick with the United States, which doesn't "drown our partners in a sea of debt" or "coerce, corrupt or compromise your independence".

In a speech to business leaders just minutes before Pence, Xi insisted the initiative was not a "trap" and there was no "hidden agenda" -- amid criticism that it amounts to "chequebook diplomacy" in the region.

Xi also lashed out at "America First" trade protectionism, saying it was a "short-sighted approach" that was "doomed to failure".

The feisty barbs on a gleaming white cruise ship moored in Port Moresby set the scene for a potentially fiery meeting between Xi and US President Donald Trump at the G20 summit in Argentina at the end of this month.

But Xi and Pence, who both wore shiny, red shirts provided by the Pacific island did hold talks on Saturday night at the leaders' gala dinner.

Pence told reporters on Sunday: "I spoke to President Xi twice during the course of this conference. We had a candid conversation."

He told him that the US is interested in a better relationship with China "but there has to be change" in Beijing's trade policies.

With fears that a trade war between the two rivals could cripple the Pacific Rim economy, some attendees voiced concern about the growing rivalry for influence in the region.

"Business leaders do not want to speak out, but behind the scenes here, they are talking over dinner saying 'how has this happened'?" said Denis O'Brien, the billionaire chairman of Digicel.

"It's a very forced situation, one country is trying to force all the other countries to change tariffs agreed over years," O'Brien told AFP.

Cruise ship diplomacy 

Trump -- and Russian President Vladimir Putin -- both decided to skip the gathering, leaving the spotlight on Xi who arrived two days early to open a Chinese-funded school and road in Papua New Guinea's dirt-poor capital Port Moresby.

Xi has been the star of the show, front and centre at official photos whereas Pence has kept a lower profile, only deciding at the last minute to stay overnight in Port Moresby -- shelving original plans to fly in and out from Cairns in Australia.

As if to counter Chinese largesse, the US, Australia, New Zealand and Japan on Sunday announced a project to boost electricity capacity in Papua New Guinea.

The project aims to raise the percentage of the PNG population with access to electricity from 13 percent to 70 percent.

And as the US and China vie for influence in the region, the statement dangled the prospect of similar projects for countries that "support principles and values which help maintain and promote a free, open, prosperous and rules-based region."

With the official business of the summit relatively low-key, much of the focus has been on the unlikely venue of Port Moresby, which is hosting its first international event of this scale.

The city is on lockdown with hundreds of police and military patrolling the streets of the notoriously crime-ridden capital.

Warships are stationed just off the coast to provide security for the leaders, and delegates and media have been housed in enormous cruise ships due to a dearth of hotel rooms.