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Li Urges ‘Normal Track’ for Australia-China Ties: Asean Update

Natnicha Chuwiruch, Suttinee Yuvejwattana, Dandan Li and Philip J. Heijmans

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Negotiators sought a breakthrough on a Chinese-backed plan to create the world’s largest regional trade pact, the Regional Comprehensive Economic Partnership, after India made last-minute requests.

Leaders attending talks hosted by the 10-member Association of Southeast Asian Nations had planned to present a preliminary deal on Monday, paving the way for countries to finalize details on the legal framework of an agreement that would cover one-third of the global economy.

The Philippines said Saturday that negotiations wouldn’t be completed until February. Commerce Secretary Wilbur Ross and National Security Adviser Robert O’Brien are leading the U.S. delegation, which was downgraded from previous years.

Here’s the latest (all times local):

‘Normal track’ for Australia-China ties (6:30 p.m.)

In an afternoon meeting with Australian Prime Minister Scott Morrison, Chinese Premier Li Keqiang called for Canberra to “push China-Australia relations back to the normal track,” according to a statement from China’s foreign ministry.

“There is no historical grievance and fundamental conflict of interest between China and Australia,” Li said, according to the statement. The two sides should view each other’s development as an opportunity, gather common interests, and conduct constructive exchanges and cooperation in the principle of mutual respect and equality, he said.

Both sides should do more to enhance mutual understanding and trust and properly handle their differences, Li said.

“China-Australia cooperation does not harm, target and thus shouldn’t be affected by any third party,” Li said, without naming the U.S., with which Beijing is battling for influence in Asia-Pacific.

Ardern gives keynote speech (5:20 p.m.)

New Zealand Prime Minister Jacinda Ardern addressed the need for a comprehensive free trade agreement in her speech to the Asean Summit. “What use is growth if everyone is not sharing in the benefits that it could bring?” she said. “This includes a shared commitment to the rules-based trading system, integration system and recognition of benefits of trade and sustainable development.”

Li wants China, Vietnam to address maritime issues (4:36 p.m.)

Chinese Premier Li Keqiang met with Vietnam’s Prime Minister Nguyen Xuan Phuc Sunday amid a standoff between the countries in the South China Sea, saying the two sides should “properly address maritime issues and create favorable conditions for expanding cooperation.”

Tensions at Vanguard Bank reef, claimed by both countries, has in recent months become a focal point of tensions.

“China is ready to consolidate political mutual trust and deepen mutually beneficial cooperation with Vietnam for the benefit of the two peoples,” according to a statement on the website of China’s State Council.

Both should “grasp the general direction of the development of bilateral relations, meet each other halfway and create a favorable atmosphere for the 70th anniversary of the establishment of diplomatic ties between the two countries next year,” it said.

Medvedev calls for Eurasia, Asean cooperation (4:21 p.m.)

Russian Prime Minister Dmitry Medvedev said Russia and Asean should work together on cybersecurity issues and called for legislation regulating the transfer of personal data in an afternoon speech.

Don’t know what U.S. wants: Duterte spokesman (4 p.m.)

Salvador Panelo, a spokesman for Philippine leader Rodrigo Duterte, told reporters that he doesn’t know what the U.S. wants in the region and that Asean nations are asking for restraint in the disputed South China Sea, the site of a growing battle for influence between China and America. The U.S. earlier failed to stop China from building artificial islands in the waters and its current attempts are too late, he said.

Guterres fears a global divide (3:47 p.m.)

United Nations Secretary-General Antonio Guterres repeated fears that tensions between the U.S. and China would split the world in half.

“I see now the concern emerging on the horizon, the possibility of a great fracture with the world’s largest economies splitting the globe into two, each with its own dominant currency, trade and financial rules, its own internet and artificial intelligence capacities and its own zero-sum geopolitical and military strategies,” he said during the Asean meetings.

He also expressed concerns about climate change, saying four of the 10 countries most impacted by climate change worldwide are in Asean.

Abe continues to Bangkok after plane fire (2:23 p.m.)

A small fire broke out on the plane carrying Japanese Prime Minister Shinzo Abe to Thailand for the Asean conference, broadcaster NHK reported, without attribution. The blaze occurred in an oven and was quickly extinguished, and the flight is continuing to its destination, it said.

Jokowi offers to help solve Rohingya crisis (1:45 p.m.)

Indonesian President Joko Widodo tweeted that he offered Indonesia’s help solving the Rohingya Muslim crisis during a meeting with the UN’s Guterres in Bangkok Saturday. The president, anown as Jokowi, said they discussed the humanitarian crisis in Myanmar’s Rakhine State, the site of atrocities against the Rohingya, and in Palestine. Indonesia is the world’s most populous Muslim-majority country.

Modi doesn’t address RCEP (10:25 a.m.)

Indian Prime Minister Narendra Modi addressed an event in Bangkok, but didn’t mention the RCEP pact. Instead he focused on the country’s advancements in technology, infrastructure and healthcare while fighting poverty and corruption. “This is the best time to be in India,” he said.

Push for RCEP to be finished this year: Prayuth (10 a.m.)

Asean and the world have faced rising challenges and uncertainties ranging from trade disputes to international crime, and their strong partnership is important for the region, Thai Prime Minister Prayuth Chan-Ocha said while opening the 35th Asean Summit. Ministers will push for RCEP’s key contents to be finished within the year, which will help boost trade and investment and build immunity for the region, he said.

Asean boosting digital economy framework: Jurin (8:35 a.m.)

The region’s digital economy has huge potential and Asean is working on a framework to improve cross-border payments and data protection, Thai Commerce Minister Jurin Laksanawisit told reporters. The digital economy accounts for only 7% of Southeast Asia’s gross domestic product, much lower than the 35% in the U.S., 27% in European Union and 16% in China, he said.

Asean shouldn’t choose between U.S. and China, Duterte says (8:05 a.m.)

Asean countries shouldn’t be forced to choose between the U.S. and China, a statement from Philippine leader Rodrigo Duterte’s office said, amid a regional battle for influence between the world’s two biggest economies.

Duterte discussed “the changing regional landscape which recognizes the rise of the dragon (China) in a world still dominated by a soaring eagle (United States),” said the statement from presidential spokesman Salvador Panelo. “He called on ASEAN leaders not to choose -- or be forced to choose -- sides by pointing out what he calls a ‘strategic mistake’ committed by the past leaderships of the Philippines, which he his now rectifying through his independent foreign policy.”

Since taking office, Duterte has pivoted toward China and away from the U.S., a longtime defense ally. Despite accepting Chinese investment, he said last month that he has nothing against the U.S., describing it as “a close friend.”

Saturday Highlights:

No RCEP pact until February: Philippines (4:10 p.m.)

Discussions for an RCEP deal won’t be completed until February because one major country isn’t ready, Philippine Trade Minister Ramon Lopez told reporters. His comments tempered expectations that an agreement would be announced within days. He said the one country -- which he didn’t identify -- wanted to “have confirmation before they can totally agree.” While Lopez didn’t identify the country, Bloomberg reported this week that India made last-minute demands after having earlier agreed to terms of a deal.

Suu Kyi delivers keynote (3:53 p.m.)

Myanmar’s de factor leader Aung San Suu Kyi gave an address toward the end of a first day of meetings, saying her country was “cautiously optimistic” about its economic transition. Myanmar isn’t at risk of economic overheating despite robust growth, she added. The country’s annual GDP growth has averaged 6-7% in recent years.

‘You go alone, you’ll be bullied’: Mahathir (2:01 p.m.)

Malaysia’s prime minister Mahathir Mohamad told a business summit that Asean can learn from U.S. President Donald Trump on trade and that a change in U.S. leadership could lead to a better direction. Southeast Asian countries should stick together in trade disputes with the U.S. and European Union to avoid being bullied, he added.

India wants greater ambition on services: Modi (11:10 a.m.)

India’s Modi said his country wants to see greater ambition on services even as it remains “committed to a comprehensive and balanced outcome” from ongoing RCEP negotiations.

“We have put forward reasonable proposals in a clear manner and are engaged in negotiations with sincerity,” he said in an interview with the Bangkok Post. “We would like to see commensurate levels of ambition on services from many of our partners, even as we are ready to address their sensitivities.”

The prime minister added that India was clear that a mutually beneficial RCEP was in its interests and those of all partners in the negotiations. India has long pushed for other countries to allow greater movement of labor and services in return for opening its market of more than 1 billion people to certain goods.

AirAsia gaining from trade war: Fernandes (10:51 a.m.)

Business is benefiting from the U.S.-China trade battle as more Chinese people are forgoing travel to America and coming to Asia, the AirAsia head told reporters. “Any free trade is good,” Fernandes said when asked about RCEP. He could invest much more in Asean if there was a single window of entry, he said.

(A previous version of this story was corrected to remove a reference to Modi’s method of transport)

To contact the reporters on this story: Natnicha Chuwiruch in Bangkok at nchuwiruch@bloomberg.net;Suttinee Yuvejwattana in Bangkok at suttinee1@bloomberg.net;Dandan Li in Bangkok at dli395@bloomberg.net;Philip J. Heijmans in Bangkok at pheijmans1@bloomberg.net

To contact the editors responsible for this story: Daniel Ten Kate at dtenkate@bloomberg.net, Karen Leigh

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