Image Courtesy: APEC Secretariat
Article No. 65/2018
Introduction Asian diplomacy was in full swing as world leaders made their way to Port Moresby in Papua New Guinea for the Asia Pacific Economic Cooperation (APEC) forum on November 15 2018. Leaders from 21 member states made an unsuccessful attempt to reach a consensus on trade and investment at the forum, as the U.S – China trade war formed the backdrop for discussions. This trade issue overshadowed the opportunity for discussing the summit theme,‘Harnessing Inclusive Opportunities, Embracing the Digital Future’. The U.S chose to play down this pertinent topic, perhaps due to a keen awareness of Beijing’s strides in integrating innovation into China’s economy. Rather, there was a failure by APEC members to produce a joint declaration for the first time since 1993. This was an outcome of tense and heated discussions about protectionism that saw China’s President Xi Jinping and U.S Vice-President Mike Pence trade jabs during their speeches. Differences between the two sides were evident from statements made by officials of the American and Chinese delegations, who were intensely lobbying other countries to have their interests reflected in the final communique.
Amidst the ongoing shift in the world order, the 2018 APEC forum was an opportunity for U.S and China to consolidate support for their respective visions of the global economy. China’s approach has been to synergize her economic diplomacy initiatives like the Belt and Road Initiative (BRI) with APEC’s blueprint for connectivity while reiterating her adherence to the principles of free and open trade. The U.S has called this into question by raising a host of concerns, ranging from the South China Sea issue to theft of Intellectual Property Rights. This move by Washington D.C aims to sway those countries of the Asia-Pacific who share apprehensions about China. Hence, APEC becomes a platform for US and China to jockey for support, sacrificing the traditional role of the multilateral grouping to power play.
Pacific Geo-politics China’s economic and diplomatic footprint in Papua New Guinea was not hard to miss, with banners of Xi Jinping and posters of China Aid lining the streets. In fact, China’s aid granted to Papua New Guinea (PNG) was US $ 20 million in 2016 and by 2017 the amount tripled, financing roads, hospitals and schools, including the conference center that hosted the 2018 APEC forum. Gifts and loans from Beijing have worried traditional PNG partners like Australia who are dedicating more capital to the Pacific island nations as a response. Chinese incursions have galvanized U.S.A and Australia to increase their assistance to the Asia Pacific. Both Washington D.C and Canberra announced that they would develop a navy base on Manus Island and finance an electricity infrastructure project for PNG.
The above developments indicate that the Pacific has become the latest theater of contestation where China is perceived as aiming to displace the U.S and its allies as traditional development assistance partners to the region’s actors. The uncertainty of U.S support has created the space for China’s economic assistance to appear as a viable alternative albeit with strings attached. By extending economic assistance to regions that have been left behind by globalization, Beijing has furthered its foreign policy objectives. For instance, Xi’s meeting with Pacific island leaders before the APEC forum only included leaders of countries which severed diplomatic ties with Taiwan during the recent years. Conditional assistance serves the purpose of incentivizing Pacific island nations like Kiribati and Solomon islands to choose Beijing over Taipei, while reducing international support for Taiwan.
China’s economic overtures also have a strategic-military edge. Beijing’s intention to develop a deep-water port at Manus Island could signal a desire to secure a military advantage over U.S bases in the region. Beijing would be able to break the first island chain and keep a close eye on U.S bases in Guam. With the matter of Chinese control of Sri Lanka’s Hambantota port serving as a cautionary tale, the U.S and its allies will be wary of economic assistance to small island nations that can potentially threaten or undermine American military preponderance. China’s geopolitical strategy, marked by an intersection of debt diplomacy and potential military gains resulting from the debt has rejuvenated the idea of the Quadrilateral Security Dialogue (QUAD).
QUAD Instead of being only a security grouping that confronts the rise of China, QUAD reflects a comprehensive approach to counter Chinese influence: both economically and militarily. The APEC forum provided the appropriate platform for officials from U.S, India, Japan and Australia to exchange views on regional security issues relevant to the Indo-Pacific region. However, they were unable to produce a joint statement, which indicates a divergence of interests within the grouping. Conceptualized with the Indo-Pacific region in mind, QUAD is yet to manifest itself or gain any serious momentum. However, the momentum of China’s regional engagement with the Asia-Pacific is sure to act as a catalyst for the grouping.
Nevertheless, it remains to be seen if all members of QUAD are willing and able to operationalize the grouping. For India, who is far removed from the Pacific region and has to manage its relations with China, QUAD can seem too confrontational, especially when the grouping has no clear economic strategy to counter Beijing’s influence. Additionally, the U.S – China trade war has softened Beijing to the idea of a stable and normalized relationship with India, an outcome in line with India’s foreign policy objectives. New Delhi would be more inclined to manage its relationship with Beijing than confront China through QUAD.
India would prefer to offset Chinese regional influence by becoming a part of APEC rather than by joining QUAD. India submitted an application for membership to APEC nearly 20 years ago. But the moratorium on new members expired in 2010, thus preventing India’s entry into APEC. It is imperative to remedy this situation, as the solution will lead to India’s economy gaining/adopting greater reform. This would be apart from New Delhi having the effect of balancing against Chinese influence without displaying overt confrontation. Besides, the theme of the 2018 APEC forum was extremely relevant to India, where digital economy ventures are gathering momentum. The issue would have been better covered had India been a part of the discussion.
Conclusion The APEC forum showed up the deep divisions between U.S and China while subjecting the world to greater uncertainty about the prospects of global economic growth. The lack of a consensus for the first time in APEC indicates that even multilateral fora can be held hostage to differing perceptions of rival states. Besides multilateral fora, small countries like Papua New Guinea are also caught in the midst of a struggle for influence by extra regional powers. The APEC forum failed to do justice to the theme, and was made a playground for competing interests.
Beijing’s maneuvers in Papua New Guinea have led to dim perceptions about China’s intent behind its infrastructure diplomacy and financial assistance. Beijing’s overtures have rallied regional powers like Australia and New Zealand to take a greater interest in the region’s development and progress. It has also revitalized the necessity of groupings like QUAD. In the context of U.S interests in the region, India’s role has become accentuated in the global economic order and more specifically, APEC. India’s inclusion in APEC needs to be made a reality by lifting the moratorium on APEC membership. This would in turn serve the purpose of maintaining a free and open region, not only in the Asia-Pacific but the recently prioritized Indo-Pacific. It is with these objectives in mind that Washington D.C must support New Delhi’s entry into APEC. It remains to be seen how the U.S-China dynamics play out in the upcoming G20 Summit on November 30-December 1 2018. Long term planning is equally significant, especially with 2020 U.S elections and the consolidation of power by Xi Jinping. The U.S – China trade war is the first of potentially many confrontations the current power configuration is likely to produce. The U.S under Donald Trump will press China on its perceived violations of international norm, ranging from the South China Sea issue to Intellectual Property Rights (IPR). These will certainly accentuate the strategic rivalry between the two countries. For developing countries, contestation between the two powers is an opportunity to steer regional multilateralism and norms in a new direction.
Rahul Karan Reddy is a Research Officer at Chennai Centre for China Studies. He was previously an intern with C3S. He studied B.A International Relations and Journalism at FLAME University, Pune. Geopolitics, security studies and domestic politics are his main areas of interest. The views expressed in this article are of the author and do not reflect those of C3S.
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