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The key diplomatic match-ups at APEC

To the untrained eye, the APEC summit appears to be little more than an endless stream of meaningless press conferences and multi-lateral back-slapping. But below the surface, the most powerful people in the world are dancing a precise waltz where one mis-step could have global ramifications.

APEC (Asia Pacific Economic Co-operation), ASEAN (Association of South East Asian Nations) and the G20 (Group of 20 major economies) will all take place in the coming week; it’s festival season for diplomats, but the real show takes place on the sidelines.

The leak of a draft communique last week announcing pleasing progress in talks that hadn’t yet taken place, proved just how stage managed these gatherings have become. Officially, they’re mostly about economics, but it’s the politics of security that will dominate backroom discussions.

Here’s everything you need to know about the match-ups that will take place behind the scenes at the APEC summit.

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China-Russia

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Russia’s Vladimir Putin and China’s Xi Jinping. Photo: Getty

With Western sanctions imposed after the Ukraine crisis and downing of Malaysia Airlines flight MH17, Russia’s relationship with China has become more important than ever.

Russian President Vladimir Putin and Chinese President Xi Jinping enjoy a reasonably good rapport, however there is a great deal of suspicion between the nations.

Before APEC officially began, the leaders signed memorandum of understanding for the development of another gas pipeline. Not only is the deal one of several Russia has with China to earn badly needed revenue, it will be conducted in local currency – not the US dollar.

Out of desperation, Russia accepted a lower price to sell gas on the Chinese market than it usually asks for. Despite the messy details having been worked out, there are rumours of more disputes, as the Russians try to squeeze the most they can out of a bad deal.

China also wants more access to Russia’s backyard in Central Asia. While Russia exercises de facto control over this region’s energy market, with the weaker countries dependent on the use of its Soviet-era pipeline for exports, Xi is negotiating deals to break the Russian stranglehold, as part of his “new silk road” diplomacy to China’s west.

This doesn’t mean that the two countries are destined for rivalry, but they still don’t enjoy a solid basis for genuine partnership. Xi and Putin will be co-operating together so that they can separately improve their own bargaining position with the US. The question is how deep this process will go, and whether it reflects suspicion of American power, or something more confrontational.

Nuclear power, economic agreements, and the supply of military equipment like advanced missiles will also be hot topics during talks between the Russians and Chinese.

Japan-China

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Ever felt like you’d rather be somewhere else? Japan’s Shinzo Abe and China’s Xi Jinping can sympathise. Photo: Getty

The big question leading up to APEC was whether Xi Jinping and Japanese Prime Minister Shinzo Abe would meet in person. Under growing pressure from China, Mr Abe has yielded enough ground on territorial disputes to secure a meeting, although he was pointedly made to wait before Xi arrived for an awkward handshake in front of the cameras.

Abe’s visits to the controversial Yasukuni shrine and subsequent statements have infuriated the Chinese and turned public opinion firmly against him. They have also offered Beijing an ideal pretext to isolate and intimidate Japan, in the hope of forcing concessions over the disputed Senkaku/Diaoyu islands. Hundreds of Chinese fishing vessels and military aircraft have violated Japanese sovereignty near these islands, raising questions in Tokyo about whether it can rely on American military support.

Last week, the Japanese government finally acknowledged that the islands are disputed, although it maintains there will be no compromise over their legal status. A joint statement on the need for dialogue was released by the two countries – while the wording allowed both nations to save face.

During their meeting in Beijing, Abe proposed a bilateral hotline between the two to help defuse any future crisis. While encouraging, this is also a sign of how serious the dispute is, and how difficult it will be for either side to risk major concessions to solve the problem.

Investors will welcome any reduction in tension, meaning China and Japan could benefit from a revival in bilateral trade, which has suffered in recent years.

Australia-China

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Hugs all round. Prime Minister Tony Abbott and US President Barack Obama. Photo: Getty

The week of diplomatic discussion will produce plenty of uncomfortable moments for Australian Prime Minister Tony Abbott as he deals with Australia’s most important economic partner at a time of strained regional relations.

Australia is edging closer to the forefront of Asia’s power game, but will be seeking to strike a balance between talking up the prospect of a free trade deal with China, and co-ordinating diplomacy with the US and Japanese allies.

In fact, a meeting between the three, scheduled to take place at the G20 summit in Brisbane, will surely aggravate China.

Beijing’s ambitious plans for APEC have already been disrupted, with the US watering down a Chinese proposal for another Asia-wide regional trade pact. This is the latest attempt by Xi to build an alternative to the web of institutions and regional initiatives which underpin American influence. With its rejection of the Asian Infrastructure Investment Bank, and support for the US-sponsored Transpacific Trade Partnership which excludes China, Canberra is making its loyalty to Washington clear.

Abbott will be trying to thread the needle between Canberra’s security alliances and economic diplomacy. With Xi scheduled to deliver a speech to federal parliament after the G20 meeting, we will see if this strategy pays dividends.

Australia-Russia

At the very least, Tony Abbott’s “shirtfront” comment spiced up this relationship a little. Aside from the MH17 investigation, the only major issue these two tough-talking leaders have on their minds is gas exports – they may become rivals in for Asian market share in the future.

However, with global economy struggling, the comments risked distracting from the growth-boosting programme of the G20. Mr Putin and Mr Abbott had an icy meeting in Beijing on Tuesday, followed by an awkward moment when they were seated next to each other at an event.

Russian diplomats have said the meeting was requested by Australia, in what was likely a move by Mr Abbott to head off any diplomatic fallout at the G20 in Brisbane. Australia’s partners in the G20 likely had a part in cooling the prime minister’s rhetoric.

Although these two gas-exporting countries might become rivals in Asia’s energy market one day, there is little else they have to do with one another.

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