Asia-Pacific leaders gather in San Francisco as tensions with China run high

The main event of thisweek's Asia-Pacific Economic Co-operation (APEC) summit in San Francisco the first face-to-face meeting in a year between U.S. President Joe Biden and Chinese President Xi Jinping will be overbefore APEC officially welcomesPrime Minister Justin Trudeau and other world leadersthis afternoon.

If the two superpowerscan't returnto more traditional diplomacy, it could set backthe entire APEC summit.

Both sides have worked hard in advance to ensure thismeeting doesn't go too far offside, said Jonathan Berkshire Miller, director offoreign affairs, national defence and national security at the Macdonald-Laurier Institute.But Biden's also heading into an election year, he said, and China's threat to American interests is the one thing that "sells" on both sides of the aisle.

"What they're not looking for ... is a rapprochement, or some sort of grand bargain with China where they agree to put aside a lot of their differences," Miller said. "What it is, is a restoration of dialogue."

"The world cannot deal with conflict in three theatres right now," Miller said. Adding to the wars in Ukraine and Gaza would be a "nightmare scenario, and I think that's part of the reason why you see the United States and China, everyone ... realizing hey ... we've got to get back to some discussion."

The old geopolitical adagethat says countries that trade with each other don't go to waris beingtested.

From the shooting down of a spy balloon over North America to someuncomfortably close recent military encounters in the South China Sea, early warning signs of the potential for a serious militaryconflictbetween China and the U.S. are growing in number.

"Everybody's hoping for some kind of a floor under this relationship, some kind of a detente and understanding," said Vina Nadjibulla, the vice-president of research and strategy at the Asia Pacific Foundation of Canada. "No one wants to see escalation of tensions in the South China Sea or East China Sea over the Taiwan issue."

But if Biden's motives as summit host are too focused on containing China from a security perspective, that risks alienating other partners in the Indo-Pacific.

"The region is much more interested in economic collaboration and economic integration, trade investments," Nadjibulla said. "The big issue will really be, what does that U.S. commitment look like?"

Can Canada 'stop digging'?

Even as the U.S. re-engages with Beijing, Miller isn't sure the Trudeau government can afford to soften its tone on China at this summit.

"The political risk, domestically, is too high," he said.

Even a trip to Beijing by theenvironment minister for climate talkswas unacceptable for the opposition Conservatives. At APEC, Canadian officials have no face-time scheduled withtheir Chinese counterparts.

If anything, the Canada-Chinarelationship has gotten worse sincethe prime minister'stense exchange with Xi on the sidelines of the G20 talks a year ago. Since then,the two countries have expelled diplomatstit-for-tat.And now, Canada has anofficial inquiryunderway to probeevidence of election interference by the Chinese Communist Party.

It's also hard for Trudeau's Liberals to make commitments toother countries if those countriesbelieve a change of government is coming.

One year after the release of Canada's Indo-Pacific strategy, "things are looking really dark, to be honest," Miller said. It's basically become a "North Pacific policy" because it's less problematic for Ottawato focus on Japan and South Korea than on its fraught relationship with China.

Trade talks with Southeast Asian partnershave stalled because "they're still worried about the sort of 'values first' approach Canada promotes in the region," Millersaid.

Those prospective trade partnersnoted howCanadaaccusedIndia publiclyof involvement in anextra-judicial killing, Miller said, and wondered what that could mean for other countries with skeletons in their closet. "Democracy is very scarce in this part of the world," he said.

So where does that leave Trudeau's strategy at this summit?

"Our goal is to stop the hole from getting deeper in Asia," saidCarlo Dade, director of the trade and investment centre at the Canada West Foundation.

Astrategy of co-operating when necessary without not necessarily co-operating will face pushback from more hawkish opponents, but there wouldbe economic consequences like lost agricultural sales if Canada doesn't engage with China, Dadewarned.

"This is a long game and the long game involves playing the hand," he said.

Canada still outside Biden'sclub

On Thursday, President Biden is expected to host an event with the members of theIndo-Pacific Economic Framework for Prosperity (IPEF),a groupfocused onharmonizingstandards to challenge and compete with China's economic dominance.

American officials reminded reportersearlier this week that 12APEC members are among the original 14in theU.S.-led IPEF. They were vagueon what sort of progress the group might be ready to announce.

Canada isn't part of these talks.Not yet, at least.

Key U.S. Democrats remainunwilling to support any trade deal that doesn't have enforceable labour and environmental protections and meet their expectations for "worker-centred trade." While other IPEF "pillars" focuson improving supply chains, lowering carbon emissions and fighting corruption, it's not clear how substantial those talks have been.

"[TheIPEF is]not a real trade agreement," Dade said. "They're not setting up rules of origin, tariff cuts, agreements on movement of people, credentials recognition ... Itwould be a redundancy that I don't think [Canada needs.]"

"We have a real trade agreement with most of the countries around that table the CPTPP [Comprehensive and Progressive Agreement for Trans-Pacific Partnership]," he added, referring to the former Pacific Rim trade agreement the Obama administration negotiated and the Trump administration withdrew from.

Ministers representing the member countries of the CPTPP, including thenewly signed-upUnited Kingdom,were set to meet Wednesday in San Francisco. Canada takesover the presidency of this group next year.

Given the American track record, observers say, other partnerscan't be sure a newdeal with Bidenwouldn't be cancelled after the next U.S. election. Biden's latestIPEF push amounts to "face-saving for the Americans," Dade said.

Still, "if the Americans are up to something, you wanna be in the room," Dade said, "even if it turns out to be nothing."

Belatedly, both the U.S. and the other key economy in the IPEF, Japan, have said they'd support Canada's participation. India another powerful IPEF (but not APEC) memberisless likely to agree; diplomatic tensions between Ottawa and New Delhi over the death ofHardeep Singh Nijjarare running high right now.

For the Americans, there's no incentive to spend any political capital on fast-trackingCanada's request to join theIPEF.

"Canada does not help you make an impression in Asia. Canada does not bring anything of substance, even on the military front," Dade said. "We've chosen not to invest in those resources ... so it's no wonder that we're not at the table if we can't meet table stakes."

'Not the time to preach'

"The whole notion of a feminist foreign policy and all the things we heard in 2015 ... the world has changed. You need to read the room," said Goldy Hyder,president of the Business Council of Canada, who is in San Francisco this week for anAPEC CEO summit happening alongsidethe political leaders talks.

"Otherwise, I think we're going to be left at the table and we may even be left outside the room. And that's never a good day for Canada when that happens."

The business community, he said, wants to see Canada's government reflect the seriousness of the moment.

"This is not the time to go in and preach," said Hyder. "This is a time to be self-aware about where we are finding ourselves."

APEC markets want Canada's liquefied natural gas, potash, critical mineralsand agricultural products, Hyder said. "Are we going to be able to promote Canada as a reliable partner that can deliver the goods and is serious about the world in which we're operating?" he added.

Hydersaid he worriesthe Trudeau government may be temptedto frame APECin the context ofdomestic politics.

"This is not an affordability conference," he said. "If you don't read that room, you're going to lose a lot of people that are important people for us. And you're going to lose us."

The APEC leaders also need to send a calming messageto businesses around the world,Hyder said.

A lot of capital is frozen right now, he added, and unless confidence is restored and deployed, economic growth won't happen, and that risksmore populist unrest.

The message the world needs to hear from APEC, Hydersaid, is "everybody breathe, we're going to be all right ... It may be a little bit messy, but we're going to get through it."

U.S. officials weren't ruling out some kind of a consensus statement from APECleaders by the end of the week. But no expectations wereset.

Yves Tiberghien, a University of British Columbia researcher currently on sabbaticalin Taiwan and Japan, toldCBC Newsthat every APEC country, including China, is facing internal struggles right now as their security establishments compete with economic and environmental ministries and businesspeople.

The APEC summit, he said, gives a bit of spaceto those working on economic and environmentalissues.

"That can only be good," he said."But the space is tenuous and it may just be a moment."