China wins, U.S. loses at APEC

By Aaron Task

November 11, 2014 9:59 AMYahoo Finance

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The Asia-Pacific Economic Cooperation (APEC) meetings continue today in Beijing, so the story isn't over yet, but it's increasingly looking like China is winning big at APEC at America's expense. Put another way: if APEC were last night's Monday Night Football game, China would be the Eagles and America the Panthers.

Let's review the highlights:

China and Russia expand their partnership: Gazprom, Russia's state-owned oil company, inked its second major gas deal with China this year. Separately, Russia's state run bank Sberbank secured about $2 billion in financing from Chinese lenders, which will help ease the pain of Western sanctions against Vladimir Putin's regime. The deals give Russia additional leverage with Europe, which is highly dependent on Russia's natural gas and helps China secure a major source of energy on favorable terms. President Obama's rhetoric about 'pivoting' toward China and the obvious tension between the U.S. and Putin's regime have helped push the Chinese and Russians closer in a classic "the enemy of my enemy is my friend" situation.

Asia embraces China: "Leaders of Asia-Pacific economies agreed Tuesday to begin work toward possible adoption of a Chinese-backed free-trade pact, giving Beijing a victory in its push for a bigger role in managing global commerce," The AP reports. This is a victory for China and blow to the U.S.-led Trans-Pacific Partnership, which excludes China.

Tear down these walls: The U.S. and China agreed to drop tariffs on about 200 different technologies, including semiconductor, medical tech equipment and GPS devices. South Korea inked a similar deal to remove tariffs on 90% of goods and Australia is expected to announce a similar agreement. Experts believe these deals could be a prelude to a major tariff-cutting agreement at the World Trade Organization meeting in Geneva next month. (This is arguably a "win" for the U.S. too; and Carolina scored 21 points vs. the Eagles.)

State-sponsored capitalism: On the eve of the APEC summit, China announced the long-awaited Shanghai-Hong Kong Stock Connect, which will allow foreign investors far greater access to Chinese companies listed in Shanghai. Separately, China's central bank engineered the biggest one-day rally in the renminbi in four years, effectively throwing a bone to its trade partners. 

Oh, and China is exhibiting its new stealth fighter at the Airshow China, which kicked off Tuesday in Zhuhai.  

In sum, while America has talked about containing China's ambitions, enemies like Russia and regional allies alike -- including Japan -- are moving toward closer ties with the Middle Kingdom. This may be just a reflection of China's "home court advantage" at APEC and the undeniable reality of its place in the global economy and dominance in the region. As discussed in the accompanying video, China is also taking advantage of President Obama's weakened state in the wake of the drubbing his party suffered in last week's midterms. For all the talk about domestic U.S. politics, the impact of President Obama's falling political stature is very much a global story and one with potentially negative implications for Americans, regardless of political affiliation.

Aaron Task is Editor-in-Chief of Yahoo Finance. You can follow him on Twitter at @aarontask or email him at altask@yahoo.com.