At the Asia-Pacific Economic Cooperation meeting on Saturday, Chinese diplomats arrived unexpectedly at the Foreign Ministry of host Papua New Guinea. Angry at Papua New Guinea’s support for American wording in the meeting’s final communiqué, they only left after police were called, Australian and other media reported.
Chinese officials denied the reports, saying suggestions they had tried to bully officials from the smaller nations were “simply untrue.” But the reported face-off dramatically underscored how a gathering that had hoped to ease tensions between Beijing and Washington’s allies in the region looks to have inflamed them instead. Two weeks before a landmark meeting between U.S. President Donald Trump and Chinese counterpart Xi Jinping at the G20 in Argentina – and just days after Trump said a list of 140 trade concessions offered by Beijing was “not acceptable to me yet” – the world’s two largest economies are now more at loggerheads than ever.
This weekend’s APEC meeting was the first time in its 29-year history that regional leaders failed to agree to a communiqué, largely over stark differences in wording over trade. It comes following heightened confrontation between the U.S. and Chinese forces in the South China Sea, tensions over Taiwan and a widely-reported warning from a former senior U.S. military official that the two countries would likely be at war within 15 years.
Overall, the summit looks to have been a major diplomatic failure for Beijing. In his speech, Xi sought – as he has since the Davos World Economic Forum annual meeting last year – to paint China as the defender of globalization and free trade in the face of Trump and growing American protectionism. Beijing has lent more than $1.2 billion to the Pacific islands, roughly a third of that to Papua New Guinea, and was counting on the summit to demonstrate the reach of such “soft power.”
Instead, its heavy-handed tactics – including banning non-Chinese journalists from Xi’s meeting with regional leaders – seems to have backfired. China found itself at odds with almost all the other nations at APEC, while U.S. Vice President Mike Pence’s speech made it clearer than ever that Washington now intends to oppose and offer its own alternatives to China’s landmark Belt and Road initiative, which promotes expanding ties between Asia, Africa and Europe, including billions of dollars in infrastructure investment.
The United States and key regional allies Japan, Australia and New Zealand are now being increasingly naked in their own use of economic clout. Sunday saw the signing of a multi-million dollar agreement between Papua New Guinea and the four states to invest millions in electricity infrastructure, seen a deliberate move to counter Beijing and safeguard U.S. and Australian military bases.
How this will play out at the G20 is not a foregone conclusion. After Pence’s unambiguously aggressive posture at APEC, Trump could take a more conciliatory approach with Xi in Argentina. The U.S. president has, after all, long been a proponent of starting negotiations with a show of force before moving to a deal. Alternatively, that meeting could simply highlight growing differences, as seen with Trump’s acrimonious spat with French counterpart Emmanuel Macron during the World War One truce commemoration ceremonies on Nov 11.
Within Washington and Beijing, many believe their countries are locked in a likely worsening multi-decade face-off. It’s a situation that leaves nations in the middle forced to pick a side – and often divided on how to do so. It’s also a growing challenge for international and particularly Western firms whose business model leaves them little choice but to work across the world.

In June, Chinese officials explicitly warned U.S. executives their firms risked becoming victims of growing tensions with the United States over trade; Chinese firms in the U.S. have also felt mounting pressure. Both Washington and Beijing are also increasingly open about pressuring other countries – in October, U.S. Secretary of State Mike Pompeo advised Panama and other Central and Latin American states against deals with China.

In nations as disparate as Venezuela, Sri Lanka and the Philippines, politics is becoming increasingly polarized between Beijing-backed authoritarians and more pro-Western elements – a dynamic with increasingly geopolitical overtones. Last week, Filipino president Rodrigo Duterte – who explicitly courted China after the Obama administration condemned a drug crackdown that saw hundreds of extrajudicial killings – criticized U.S. naval activity in the South China Sea, saying Beijing was already “in possession” of the area. The comments – ahead of a visit from Xi – was seen at odds with many within the Filipino military and wider political establishment, desperate to counter Beijing’s gradual militarization and occupation of disputed reefs and atolls.

While the trade dispute remains the preeminent driver of U.S.-China tensions, it may be these military confrontations that prove the most dangerous. Military links between Washington and Beijing have soured substantially in recent months, with U.S. Defense Secretary James Mattis cancelling a visit to Chinese counterparts and China disinvited from the major U.S.-led RIMPAC exercise this summer. Perhaps even more seriously than their posturing over the South China Sea, both nations appear to be doubling down over Taiwan, considered by Beijing a rogue province.

It’s a dynamic that has the region worried and unsettled – but unsure how to act. Japan has been the most obvious example of a country independently trying to improve its own relations and diplomatic channels to Beijing. Events at APEC will make that ever harder – as will newly heightened rhetoric and weapons testing from North Korea, perhaps a sign a more isolated China now feels less bothered when it comes to restraining Kim Jong Un.

At the end of the month, Trump and Xi will have the opportunity to reverse their increasingly dangerous path. If they cannot do so, all sides may face some very unpleasant surprises to come.

A Reuters global affairs columnist, Peter Apps is the founder of think tank Project for Study of the 21st Century (PS21). Before that, he spent 12 years as a reporter for Reuters covering defence, political risk and emerging markets.