APEC Meeting Ends In Dispute And Controversy
China and the United States are escalating tensions in the Pacific over trade and security but Scott Morrison insists progress is being made.
Australia and the US will jointly host a naval base on Manus Island, creating a new staging point into the contested South China Sea.
The two nations have also joined with New Zealand and Japan to fund a huge electrification project in Papua New Guinea, in competition with China's development goals in the nation.
But at an Asia Pacific Economic Cooperation meeting in Port Moresby on Sunday, Morrison played down suggestions relations in the Pacific were fractured.
"I think that overly exaggerates the situation," the prime minister told reporters.
"I think there is a lot more pragmatism going on here than people have been prepared to acknowledge in the commentary.
"There's a lot of movement under the water."
Morrison would not confirm how much the expanded Lombrum naval base would cost, but said Australia was there at the invitation of the PNG government.
He had a brief but "warm" meeting with President Xi Jinping on Saturday night, but the naval base did not come up.
"We were focused on our relationship and what we were doing together," Morrison said.
China and the US traded verbal blows on Saturday in keynote speeches, with the US urging countries not to sign up for huge foreign debts, and China promising there was no hidden agenda with its infrastructure program.
Chinese officials also reportedly stormed into PNG Foreign Minister Rimbink Pato's office on Saturday demanding he change the wording of an official communique, which he refused to change.
Morrison said the trade war between China and US was hurting global economic growth, but he believed both sides wanted to find a resolution.
"I think they're fully aware, because these things also impact their economies," he said.
"The issues have become very well known, whether it's on WTO or intellectual property."
Morrison will host a BBQ for Pacific island leaders on Sunday night at the Australian High Commission in Port Moresby.