US-China standoff makes it harder to deal with financial crises and terrorism

The 21 members of the Asia-Pacific Economic Cooperation forum wrapped up their annual summit in Papua New Guinea without adopting a joint declaration. This troubling outcome comes against the backdrop of an intensifying struggle between the U.S. and China for regional economic and national security leadership.

What happened at the APEC gathering is not merely a problem for U.S.-China relations or the Asia-Pacific region; it endangers the very framework for international cooperation itself.

America and China must find a way to reduce tensions as quickly as possible and fulfill their responsibilities in helping maintain global stability.

The two countries are locked in a fierce trade war, with the U.S. imposing punitive tariffs on half of its Chinese imports for reasons of protecting intellectual property, and Beijing fighting back with its own retaliatory steps.

China has begun to challenge America’s economic primacy through its Belt and Road Initiative to build infrastructure across Europe and Asia and its “Made in China 2025” industrial modernization program. Beijing’s efforts have, inevitably, created a deep-rooted rivalry with Washington, which is working hard to contain China.

Not to be overlooked are the countries’ strategic considerations about regional military hegemony. The South Pacific serves as the front line in their competition over national security. That is why Beijing has provided large amounts of economic assistance to South Pacific Island nations such as Papua New Guinea, which chairs this year’s APEC meetings, Fiji, Tonga and Vanuatu. China-backed projects to build port facilities in the region are said to be tied to Beijing’s plans to strengthen its naval capabilities.

The various tensions simmering between the two countries amid what some are calling a “new Cold War” came into sharp focus at the APEC summit. One reason why the two sides failed to reach a consensus on the wording of a joint declaration appears to have been a desire to show the world that they will not give an inch to the other party.

This stalemate between the world’s two largest economies cannot be allowed to continue, as a protracted trade war could prevent the global economy from recovering.

A prolonged standoff could also create a global leadership vacuum. The U.S. and China are both members of APEC and the Group of 20 industrial and emerging-market economies. If those annual summits become dysfunctional due to their rivalry, responding to financial crises, terrorism and other problems will become even harder.

U.S. President Donald Trump and Chinese leader Xi Jinping are expected to hold talks on the sidelines of the G-20 leaders’ summit in Argentina from late November. This is their chance to defuse the situation.

Ending the trade war is a matter of great urgency. The U.S. should back off on its unilateral sanctions on China and resolve bilateral issues through dialogue. China, meanwhile, is heavily to blame not just for the theft of intellectual property rights but also for continuing to excessively protect domestic industries and restrict foreign investment. We hope Beijing is open to the possibility of cooperating on addressing trade imbalances with the U.S., instead of merely fighting back with retaliatory measures.

China recently submitted to the U.S. an “action program,” divided into 142 specific items, for resolving trade friction. Though Trump was reportedly unsatisfied with it, Washington should not ignore such attempts to ease trade tensions, as they may offer clues to a way forward.

While representing the U.S. at the APEC summit, Vice President Mike Pence let it be known that Washington would address the South China Sea issue at the upcoming Trump-Xi summit.

His words underscored the fact that the APEC troubles stemmed not only from Sino-U.S. economic friction but also from their conflict over national security interests. We urge both sides to look for ways to break the impasse in that area as well.

Japanese Prime Minister Shinzo Abe also has an important role to play. We hope he will not merely exhort the U.S. and China to show restraint when it comes to imposing sanctions and retaliatory measures, but also play a leadership role in putting APEC and the G-20 back on track and containing protectionism.