APEC 2018: Australia caught in middle of China, US

Australia is caught in the middle of escalating tensions between China and the United States, as the superpowers battle over trade and strategic control.

China and the US have faced off in a war of words at the APEX Summit in PNG

Australia is urging Asian and Pacific leaders to focus on free trade but Scott Morrison is now bang in the middle of escalating tensions between the United States and China.

The US and Australia will share a naval base in the north end of Papua New Guinea on Manus Island, creating another key staging point close to the contested South China Sea.

At an Asia Pacific Economic Cooperation meeting in Port Moresby on Saturday, Mr Morrison urged nations to embrace free trade and avoid "unsustainable debt".

Australia's Prime Minister Scott Morrison and US Vice President Mike Pence.
Source: Getty Images

But he also confirmed the US and Australia will share an expanded Lombrum naval base on Manus Island, as the US ramped up rhetoric against China.

US Vice President Mike Pence quoted President Donald Trump in his speech following Chinese President Xi Jinping.

"We have great respect for President Xi and respect for China. But in the president's words, China's taken advantage of the United States for many, many years," he said.

"And those days are over."

His speech was met with stony silence from the Chinese delegation, after President Xi had reassured leaders his Belt and Road Initiative was not a debt trap.

"It is not designed to serve any hidden geopolitical agenda," President Xi said on Saturday.

"Nor is it a trap, as some people have labelled it."

But Mr Pence said loans to developing countries are too often opaque and encouraged nations to look to the US instead of China.

"Too often they come with strings attached and lead to staggering debt," he said in his speech.

"Do not accept foreign debt that could compromise your sovereignty.

"Just like America, always put your country first."

Mr Morrison committed Australia to look to the Pacific nations and on Sunday he will host an informal BBQ with Pacific leaders.

He also announced a joint partnership with Japan and the US to fund infrastructure around the region.

On the back of Mr Morrison's defence of free trade at the summit, Australian Trade Minister Simon Birmingham said he's confident the United States is interested in an open trading environment in the long run.

Australia is hoping the US will, in the end, take a similar approach to its trade dispute with China as it did with its tariff threats against Mexico and Canada.

"Ultimately, they laid down arms, they walked away from threats, and they struck a new trade deal that ensures trade continues in that North American bloc," he told ABC TV on Sunday.

"We hope the same will happen in relation to China."


Published 18 November 2018 at 6:18am, updated 18 November 2018 at 11:45am