TOKYO (The Straits Times/ANN) – Deputy Prime Minister Heng Swee Keat urged Asia to redouble its efforts to strengthen the rules-based, multilateral trading system that underpins its growth.
The United States and China need to accept new realities, come to terms with their global responsibilities, and rebuild trust in their relationship and BRIng stability to the world order, Singapore’s Deputy Prime Minister Heng Swee Keat said here on May 30.
At the same time, Heng urged Asia to redouble its efforts to strengthen the rules-based, multilateral trading system that underpins its growth – as well as to work with the global community to uphold this system.
“Our goal for all countries to work together can only be realized if we are part of one globalized system,” he said.
“This is precisely why the U.S. and China have to work together. This will not work if the world is fragmented into two blocs, with separate systems, technologies and economies.”
Heng, who is on a three-day visit to Japan, was addressing the 25th Nikkei Future of Asia conference themed “Seeking A New Global Order – Overcoming The Chaos.”
The Straits Times is a media partner of the annual forum.
He said Sino-U.S. ties, which he described as the most important bilateral relationship in the world, is key to continued peace and prosperity both in Asia and the world.
“It is still possible for both sides to resolve their differences,” Heng added. “Fundamentally, the US and China will need to rebuild trust in their relationship.”
For a sustainable partnership, he said, there will have to be some give-and-take from both sides, with trade issues unbundled from other concerns and dealt with separately.
They must also make an effort to avoid escalation by managing their domestic politics, while also understanding each other’s domestic constraints and red lines, for negotiations to be constructive, he added.
“It is important to clarify what each (initiative) is intended to achieve,” he said later in a dialogue session with Nikkei senior editor Sonoko Watanabe.
He cited the Belt and Road Initiative (BRI) as one issue that needs to be ironed out. While it has been seen as “a sort of strategic diplomacy and potentially a debt trap”, China has said this was not its intent.
The feuding economic superpowers have imposed tit-for-tat tariffs worth billions of dollars on each other’s goods, as Washington seeks to address its trade imbalance with China.
U.S. President Donald Trump, speaking in Tokyo on Monday, said he felt there was a “very good chance” both countries will strike a deal, though he said he was in no rush to enter into one.
Chinese state media said on Wednesday that Beijing was ready to strike back using its dominant position as an exporter of rare earth to the U.S. as leverage in the trade war.
Separately, the US has also blacklisted Chinese technology giant Huawei on security concerns.
“As both the US and China harden their positions, there are fears that the global order will end up in another Cold War. However, the context of U.S.-China tensions is fundamentally different from the Cold War,” Heng said.
Unlike in the 1980s, when the US and then-Soviet Union hardly traded with each other, trade flows between the US and China are significant, and global value chains are highly integrated, he added.
The iPhone, he cited as an example, is designed in the US, assembled in China, but with component parts from South Korea, Japan, Taiwan, the U.S., Britain and Germany.
“Unravelling such an integrated supply chain will be costly,” he said. “Jobs will be displaced, costs will go up, and the ripple effects on the global economy will be severe.”
While the relationship between the US and China is complex, Heng said, it is also highly interdependent, and so, it is in the interest of both countries to “work out a new model of constructive cooperation”.
This means that the US will need to adjust to China’s emergence as a major global player, and recognize that while China is a competitor, it is also a valuable partner.
“More fundamentally, the U.S. has to accept that it has no better option but to work with China, because trying to contain it will result in worse outcomes,” he said.
China, meanwhile, will need to “accept that its increased strategic and economic weight comes with greater international responsibility”, and in this regard, Heng said the BRI is a positive step.
Still, while China has said it will continue to open up, it will need to convince sceptics that it will actually do so.
This means, Heng said, it will have to accelerate its economic liberalisation, level the playing field for foreign businesses, and continue to participate constructively to improve the multilateral trading system.
“China needs to demonstrate that its peaceful rise will indeed benefit the rest of the world, including the US, and be prepared to shoulder additional international responsibilities,” he said.
Such external factors, as well as the fast pace at which technology and innovation are changing, are key challenges for Singapore’s fourth generation of leaders, as are social challenges like its ageing population, Heng said in response to a question by Watanabe on the challenges for his leadership.
He acknowledged that Singapore’s youth may be more open to opposition views, having grown up in relative affluence and with more exposure to the world than their elders whose main concerns were to put food on the table and have a roof over their head.
“Getting (different) views together and having a common view of where does Singapore go will be a very critical part of our challenge going forward,” he said. “We hope that we will continue to have very good people to join us in the political leadership.”
In his speech, Heng said Asia has an opportunity to shape international order in a way that will support the development and stability of the region and the world.
He pointed to mega trade deals – the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and Regional Comprehensive Economic Partnership (RCEP) – as being crucial to BRIng the region closer.
He lauded Japan’s role in steering the CPTPP to fruition after Trump pulled out of the original Trans-Pacific Partnership deal, and called on Japan to exercise the same leadership to BRIng the RCEP to fruition.
Heng also urged Japan, which has invested in excess of US$400 billion (S$551 billion) in Asia to date, to continue its investments to help the region grow.
Meanwhile, the 10-nation Asean bloc can also do its part to keep the regional architecture rules-based, open and inclusive.
“Asia’s strategic weight is growing,” Heng said. “This is an opportunity for Asia to shape international order in a way that will support the development and stability of Asia and the world. ●
By Walter Sim