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US, China in APEC cruise ship clash on trade, influence

Andrew BEATTY and Richard CARTER
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Chinese President Xi Jinping said erecting trade barriers was short-sighted and doomed to failure

China and the US crossed swords Saturday ahead of an APEC summit, duelling over protectionism, trade tariffs and "chequebook diplomacy" as they laid out sharply contrasting visions for the Pacific Rim region.

In combative back-to-back speeches at a business forum held on a hulking cruise ship moored in Port Moresby, Xi Jinping and US Vice President Mike Pence pulled few punches.

The feisty exchanges laid the ground for what could be a fiery encounter between the Chinese leader and President Donald Trump at next month's G20 in Argentina.

Xi lashed out at "America First" trade protectionism and stressed that global trade rules should not be applied "with double standards or selfish agendas" -- in a thinly veiled swipe at Washington.

The world's top two economies have been embroiled in a spiralling trade war, imposing tit-for-tat tariffs on each other's goods in a confrontation experts warn could torpedo the global economy.

Xi urged the world to "say no to protectionism and unilateralism", warning it was a "short-sighted approach" that was "doomed to failure".

For his part, Pence vowed US tariffs would remain in place unless Beijing "changes its ways".

"We've put tariffs on $250 billion in Chinese goods and that number could more than double," he told CEOs from around the region.

Amid fears diplomatic and trade friction could spill over into the military sphere, Pence announced the US would join forces with Australia in the development of a new naval base.

And in a move likely to irritate Beijing, he also briefly met Taiwan's APEC representative.

Trump decided to skip the summit in Papua New Guinea, leaving the door open for Xi, who arrived two days earlier for a state visit and has been the undoubted star of the show.

Xi opened a new road and a school in Port Moresby, where he was serenaded by dozens of people from various tribes sporting parrot feathers, possum pelts and seashell necklaces.

- 'Staggering debt' -

The APEC summit of leaders from 21 countries across the region has developed into a tussle for influence between an increasingly assertive China and a more withdrawn US.

This appeared to be borne out by the first "family photo" of leaders, which featured Xi front and centre while Pence was absent.

But in his speech, Pence lashed out at Chinese largesse in strong terms, mocking the Belt-and-Road initiative that sees China offering loans to poorer countries in the region to improve infrastructure.

The vice president urged Pacific nations to embrace the United States, which, he said, did not offer a "constricting belt or a one-way road".

He said the terms of China's loans were "opaque at best" and "too often, they come with strings attached and lead to staggering debt".

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

"We don't drown our partners in a sea of debt... We don't coerce, corrupt, or compromise your independence. The United States deals openly and fairly."

As if pre-empting the criticism, Xi defended the plan amid attacks it is akin to "chequebook diplomacy" to further Chinese interests in the region.

He denied there was a "hidden geopolitical agenda... nor is it a trap as some people have labelled it".

And the Chinese leader warned that no one would gain from heightened tensions between the US and his emerging superpower.

"History has shown that confrontation -- whether in the form of a cold war, hot war or trade war -- will produce no winners," he said.

Pence too stressed that Washington wanted a "better relationship" with Beijing -- if it respects its neighbours' sovereignty, embraced "free, fair and reciprocal trade" and improved its human rights record.

- 'Raskols' -

Officially, the leaders will discuss improving regional economic cooperation under the theme of "embracing the digital future" but the punchy speeches set the scene for a tense gathering.

In the absence of Trump and Russian President Vladimir Putin, the summit itself has been relatively low-key and the focus has turned to the venue Port Moresby.

The capital of Papua New Guinea has been ranked as one of the least liveable cities for expatriates, with a high level of crime, often perpetrated by feared street gangs known as "raskols".

Delegates have been advised not to venture out alone -- especially after dark -- and officials and journalists have been hosted on massive cruise ships moored in the harbour due to safety issues and a dearth of hotel rooms.

Nevertheless, in a last-minute change-of-heart, Pence decided to stay overnight in the city rather than fly in and out from Australia as originally planned.

Resplendent in shiny red or yellow patterned shirts, the leaders enjoyed a respite from negotiations at a gala dinner before starting the formal talks on Sunday.