G20 summit officially opens in Japan's Osaka

World leaders gather for a photo during the G20 Osaka Summit on Jun 28, 2019. (Photo: AFP)

Japan's Prime Minister Shinzo Abe opened the meeting, which will be dominated by contentious discussions on trade, geopolitical tensions, and climate change.

But the mood appeared friendly in the opening minutes, with smiles on the faces of the arriving leaders as they posed for the traditional "family photograph".

US President Donald Trump and China's Xi Jinping, whose countries are mired in a damaging trade war, exchanged a handshake before the photo.

President Donald Trump, Japanese Prime Minister Shinzo Abe and India's Prime Minister Narendra Modi attend a meeting during the G20 Osaka Summit in Osaka on Jun 28, 2019. (Photo: Brendan Smialowski/AFP)

And as the leaders headed into the first session, French President Emmanuel Macron leaned down to whisper something into Trump's ear, covering his mouth for privacy as he did so.

Map showing the G20 members, plus a comparison of their respective GDPs. (AFP/Vincent LEFAI)

The first session of the meeting is focused on the digital economy, with concerns about privacy and security on the agenda.

"Digitalisation has rapidly changed various aspects of our society and economy," Abe said as he opened the session.

"I'm happy to see the momentum to globally tackle the digital economy."

But in a sign of the ongoing tensions likely to dominate talks, Trump appeared to make reference to US concerns about the security threat posed by Chinese telecoms firm Huawei.

US Secretary of State Mike Pompeo (left), US President Donald Trump (2nd left) and other US officials wait for a dinner with Australia's Prime Minister Scott Morrison (2nd right) at the Imperial Hotel in Osaka, Japan, on Jun 27, 2019. (Brendan Smialowski/AFP)

As "we expand digital trade, we must also ensure the resilience and security of our 5G networks", he said.

Trump's administration has taken measures to ban Huawei, with China reportedly seeking an end to the restrictions as part of any resumption of talks on resolving the trade war.

The summit is being overshadowed by the trade war between the world's top two economies, with hopes that Xi and Trump can reach a truce when they hold talks on Saturday on the sidelines of the summit.

TRUCE POSSIBLE?

The US president earlier said Beijing wanted to do a deal because the world's number-two economy was "going down the tubes".

Furious at what he sees as an unfair advantage in the trading system, Trump has already hit Beijing with US$200 billion in levies on Chinese imports and appeared to threaten more.

"You have another US$325 billion that I haven't taxed yet - it's ripe for taxing, for putting tariffs on," he said in an interview with Fox Business Network.

China meanwhile accused Washington of a "bullying trade tactic" by unilaterally imposing tariffs.

Efforts by the rivals to reach a trade deal fell apart in May, ramping up a spat that has proved a serious headwind for the world economy.

Experts believe there is little chance of a full deal at the G20, but they are hopeful about the prospects for a truce.

Ebrahim Rahbari of CitiFX predicted a 60 per cent chance the leaders will "agree on further negotiations with the eventual goal of a comprehensive agreement but with little immediate effect beyond pushing back ... the threat of additional US tariffs on Chinese imports."

But even a truce is not guaranteed, with the Wall Street Journal reporting on Thursday that China will not agree to any deal unless Washington lifts its ban on telecoms firm Huawei.

IRAN TENSIONS

Trade will be far from the only contentious issue on the table, with climate change emerging as another sticking point.

French President Emmanuel Macron has said he wants strong wording in support of climate change action, but Washington is unlikely to back any statement endorsing the Paris climate change deal, from which it plans to withdraw.

French President Emmanuel Macron has said he wants strong wording in support of climate change action. (AFP/ludovic MARIN)

Japanese officials say they hope to find common ground, despite Macron insisting the issue is a "red line", but concede it will be tough.

"The work to consolidate various opinions is expected to be difficult," a Japanese official admitted to reporters on Thursday.

Eyes will also be on German Chancellor Angela Merkel, who arrives in Japan on Friday after suffering a new episode of trembling that sparked fresh questions about her health.

Looming over the talks will be continuing tensions in the Middle East. Trump said before heading to Japan that any war with Iran "wouldn't last long."

That assessment is unlikely to find favour among G20 leaders, with Macron warning on Thursday: "there are no short wars."

When a war begins, he said, "we know when it starts, but rarely when it will end."