APEC Summit Crashes And Burns As Mike Pence Stokes Fears Of Economic Cold War

Anyone hoping that Donald Trump’s ostensibly conciliatory Friday remarks on trade signaled a thawing of relations between Washington and Beijing saw those hopes dashed over the weekend in dramatic fashion.

On Saturday, Vice President Mike Pence (who has a history of sounding a hawkish tone while in Asia), traded what amounted to insults with Xi Jinping in dueling speeches at the Asia-Pacific Economic Cooperation summit in Papua New Guinea.

Xi stuck to the script, calling for a deescalation of trade tensions and an end to America’s protectionist policies while Pence explicitly said the U.S. “will not change course” unless China behaves. Pence also took the decidedly ill-advised step of mocking Xi’s Belt and Road initiative, essentially accusing Beijing of attempting to turn participants into debt serfs.

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Given that, it comes as no surprise that the summit ended without an agreement on a final communique. This is the first time in nearly three decades that the marquee Pacific Rim summits did not reach an agreement on a joint declaration.

“The entire world is worried”, Papua New Guinea Prime Minister Peter O’Neill told reporters.

A Chinese foreign ministry official essentially called Pence’s debt serf accusations absurd. Specifically, Wang Xiaolong said this at a press conference:

The assistance provided by China has been warmly welcomed by our partners in this region and beyond. No country either in this region or in other regions has fallen into a so called debt trap because of its cooperation with China. Give me one example.

Spoiler alert: There are no examples. Pence made that up. Western powers are concerned that China’s efforts will effectively obviate the need for developing economies to rely on the West for investment.

Adding to the drama were reports that Chinese delegates attempted to literally storm the office of Papua New Guinea’s foreign minister in an apparent effort to strongarm the communique. Rumor has it that police were called.

“Chinese officials demanding a meeting forced their way into his office Saturday and had to be escorted away by police after a confrontation”, the Wall Street Journal asserts. The  Chinese foreign ministry sought to dispel the story as follows:

That’s simply not true. We are having close interactions with Papua New Guinea colleagues … we are mostly on the same page both on the process as well as substance on the agenda.

The bottom line is that Pence attempted to perpetuate the notion that nations will be forced to choose between China and the U.S. when it comes to economic development and commerce more generally.

In other words, we seem to be spiraling towards an economic cold war.

We’ll give the last word to Jonathan Pryke, a Pacific research specialist who spoke to Bloomberg for an article published Sunday:

The language we heard from Pence is quite concerning because it shows we’re moving toward a zero-sum game geopolitics in the Asia-Pacific. The great hope of convergence between China and the U.S. is becoming less and less of a likely reality.