SINGAPORE: It may “take some time” before progress can be seen in the trade conflict between the United States and China, given the lack of strategic trust and how both superpowers are grappling with their own internal issues, said Singapore’s Trade and Industry Minister Chan Chun Sing.
Mr Chan was speaking during a dialogue session held as part of the Singapore Business Federation’s (SBF) ASEAN Conference 2019 on Tuesday (Jun 4). The session was moderated by SBF CEO Ho Meng Kit, who had asked how the trade battle between the world’s two biggest economies could develop.
AdvertisementAdvertisement“Our view is that it will take us some time to see progress in the US-China trade issues,” replied Mr Chan.
Noting that “both sides have hardened their views” against each other, Mr Chan said the US now sees China as having “done many injustices to them”, while there are many in China who view the US as “trying to thwart (its) rise and growth”.
“So there is a lack of strategic trust between the two and that will take time to resolve,” he said.
Both countries are also grappling with their own internal issues, added Mr Chan.
AdvertisementAdvertisementFor the US, it is now focused on maintaining long-term competitiveness through its enterprises, the skills of its people and infrastructure investments.
China, on the other hand, is looking at how to mitigate the uneven pace of development between its first-tier cities and the rest of the country, as well as allocation of resources between privately-owned enterprises and state-owned firms.
“For them to deal confidently with one another and resolve some of the issues, they must also resolve some of their own internal challenges,” said Mr Chan, who said that this is “going to take some time”.
[h=3]READ: US-China face-off is not a ‘strategic inevitability’, says PM Lee Hsien Loong[/h] [h=3]READ: Smaller countries like Singapore can work together to stem US-China hostility, says PM Lee[/h]On whether Singapore could be put in a delicate position and how it should navigate these uncertainties, the minister said quickening shifts in global supply chains and distribution networks will be “inevitable”.
Yet this may not be the top concern. “So long as we … are sensitive to the (trade) flows and we go to where the flows are, there will still be business to be done,” he explained.
The bigger danger lies in potential falls in trade flow volumes.
“If the world goes into a downward spiral because of a loss of confidence, then the entire production system will come down,” he said.
“We should all be much more concerned with the volume. Because if that comes down, it is not so easy to revive the confidence in the global markets, including financial markets,” he said. “But shifts we can all adjust and some people may even find new opportunities.”
[h=3]READ: Commentary: China is just biding its time in this trade war[/h]WHAT ASEAN AND BUSINESSES CAN DO
In light of the current global environment, Mr Chan reiterated the Association of Southeast Asian Nations (ASEAN) should keep upholding and updating the World Trade Organisation system, as well as develop common platforms and standards for the region.
In particular, countries in the region should come together to seize opportunities in the digital space.
Mr Chan said the flow of data across borders has given rise to the creation of new products and services, which is a “tremendous opportunity”.
“We will have to resist the temptation to look at the new economy as if it is the old (and) apply standards on the new data and digital economy as if they were material resources where consumption is subtractive,” he said.
“It is not a zero sum game.”
Businesses can also play a part in preventing further deterioration in the current world geopolitical and economic environment, said Mr Chan, who offered three suggestions.
For one, he urged ASEAN businesses to “make the case to keep markets open and integrated” by working with their respective governments.
Businesses can also provide fresh ideas on emerging issues, such as digital integration, said Mr Chan.
Digitalisation, for one, is an area that bears new opportunities for companies and the region's people. This is why ASEAN signed an agreement on e-commerce and developed the Digital Integration Framework last year. An action plan, which aims to be the blueprint for digital integration in the region, is in the works, said Mr Chan.
“Businesses should come together and drive specific components of this action plan with governments,” he said, while referring to the development of regional digital talent and standards to enable the seamless flow of data.
“All of these collectively will enable ASEAN to compete with the rest of the world, and secure our economic prosperity for many more years to come.”
While keeping pace with transformation, businesses should also ensure that their workers are given help to acquire new skills.
“If workers are left behind, if the salaries and wages of our workers are not progressive but regressive, then we can all expect a backlash against trade, globalisation and technology with negative global consequences,” said Mr Chan.
“This is the reason why the Government, businesses and the labour movement must work closely together to help businesses and workers adapt and adjust."
He added: "Without that, we all risk the rise of populist politicians who will come with the promise of the easy way out but (are) actually setting back the necessary adjustments.”
To that end, Mr Chan urged business leaders present to “never underestimate (their) power and responsibility”.
“Many of the integration and collaboration need not be led by the government. Many of them can be led by the private sector,” he said, while citing the proliferation of payment systems in ASEAN as an example.
“Your job is not only to lobby your respective governments for more integration but more importantly, you can take leadership on the commercial and business front.”
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