Political Hotspots May Bubble Up on G-20 Sidelines in China

(Bloomberg) -- This weekend the leaders of 20 of the world’s major economies gather in China to talk about issues ranging from the global economy to the threat of terrorism. As usual, it’s the sideline tensions that may capture attention.

Last year’s summit in Turkey was overshadowed by Islamic State’s deadly attacks on Paris just days before. The violence, which left 130 people dead and hundreds wounded, spurred a flurry of meetings on the sidelines, mostly about Syria, where a civil war helped create the conditions for the terrorist group to grow.

The previous year in Australia, talks were dominated by Russia’s occupation of Crimea and its alleged support for Ukraine separatists. The host country’s then leader, Tony Abbott, threatened to "shirtfront" -- or tackle -- Vladimir Putin, who ended up leaving the summit early. As leaders prepare to meet in China, there are several hot-button issues to watch for:

U.K.-China Tensions

Prime Minister Theresa May will attempt to smooth over tensions that erupted after she postponed approval of the 18-billion-pound ($24 billion) Hinkley Point nuclear power plant in southwest England. China’s 6-billion-pound investment in the facility was the biggest deal announced during President Xi Jinping’s visit last October, when he proclaimed that the U.K.-China relationship was in a “golden era.” May has since sent a letter to Xi and Premier Li Keqiang expressing her desire to enhance ties. What Xi will want to hear is that she is inclined to proceed with the project.

Missile Shield Spat

Relations between Seoul and Beijing have become so frosty, so fast, there are doubts over whether Xi will meet at the G-20 with South Korean counterpart Park Geun Hye, who has in the past been received warmly. That’s after Park said she’d deploy a U.S. missile shield on her country’s soil. While it’d be for protection from North Korea, China says the Terminal High Altitude Area Defense system could be used against it. There’s been some talk already of punishing South Korea, which needs Chinese trade, tourism and investment. Russia’s also not a fan of having Thaad in North Asia.

For an explainer on the Thaad tensions, click here.

Turkey Vs U.S.

Turkey’s Recep Tayyip Erdogan and U.S. President Barack Obama will meet for the first time since Erdogan suppressed an attempted coup in July. The Turkish leader says Fethullah Gulen, a self-exiled Islamic cleric, orchestrated the coup from his U.S. home. Erdogan wants Gulen extradited.

Erdogan has started to mend ties with Putin that frayed after Turkey shot down a Russian military jet near the Syrian border last November. If things sour between the U.S. and its key NATO ally it could have implications for the Syrian conflict, as Turkey provides a military base for U.S. air strikes against Islamic State. Turkey started a major ground operation in Syria last week.

East China Sea

Relations between North Asia’s two largest economies, China and Japan, are in a rough patch over disputed islands in the East China Sea. In recent weeks, Chinese coast guard and fishing boats have been frequently spotted in what Japan regards as its territorial waters. Japan reportedly plans to develop surface-to-ship missiles to defend the remote islands.

While the G-20 in theory provides a chance for Xi and Japan’s Prime Minister Shinzo Abe to hold talks, their first formal meeting at the APEC summit in Beijing two years ago was brief and frosty. Also watch for any potential sideline chat between Obama, Abe and Park, which may not go down too well with the summit host.

Australia-China Freeze

Tensions are brewing between Australia and China amid Australia’s criticism of China’s actions in the disputed South China Sea, and given the government’s decision to block the potential sale of an electricity grid to a Chinese company on national security grounds. China’s Commerce Ministry warned that decision would “severely” reduce the appetite for Chinese companies to invest in Australia. Prime Minister Malcolm Turnbull may use any meeting with Xi to attempt to allay concern that Australia is anti-Chinese investment.

What Else to Look For

• What state Obama’s swan song visit to Asia as leader leaves U.S. relationships in the region, especially with the outlook cloudy for the ratification of a U.S.-led Pacific trade pact known as TPP.

• How Michel Temer, Brazil’s potential new president, performs in his international debut should Dilma Rousseff be impeached this week and he comes to China.

• Whether Canadian Prime Minister Justin Trudeau can reset ties with the world’s second-biggest economy on his first official visit to China, after a rocky start marred by tensions over investment policy in Canada.

• How Prime Minister Lee Hsien Loong of Singapore, not a G-20 member but on the guest list, walks a balance between the U.S. and China at the meeting.

--With assistance from Jason Scott To contact the reporters on this story: Ting Shi in Hong Kong at tshi31@bloomberg.net, David Tweed in Hong Kong at dtweed@bloomberg.net. To contact the editors responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net, Andy Sharp

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