Being in the middle of the current US-China tug-of-war, Singapore believes that Asia must do a better job of making its voice heard. This was the message of former Prime Minister Goh Chok Tong who spoke in Seoul last week. Goh is urging other nations caught in the middle of the Trump versus Xi match up to step forward and protect the region’s stability.
“If we want to be independent and neutral in the U.S.-China rivalry, we must exercise our collective influence as the ‘moderate voice’, and as friends of both the U.S. and China. We all have a stake in building a cohesive and peaceful world.”
The necessity of keeping a “moderate voice” and a “neutral” stance
Both the Chinese and the Americans are chief economic partners to nations around the world. The trade skirmish between the US and China with its concomitant reciprocal measures by other trading partners will surely have worldwide repercussions.
As a tiny state and an open economy, Singapore is extremely reliant on trade. With the trade tensions between the two countries, Singapore will be impacted on three levels.
The first is the direct effect from tariffs that apply to most countries. The second relates to the incidental impact, resulting from distractions to global supply chains, due to the tariffs imposed by the US and China directed at each other. And the third which is of greatest concern — if the trade conflict escalates, it can lead to a broad-based slowdown in global trade flows, triggering a sharp and sustained fall in global business and consumer confidence.
When this takes place, global investment and consumption spending will plummet, with a negative effect on international economic growth. This can eventually impact businesses, jobs and consumers in Singapore.
However, in the midst of continuing strife and economic tensions, there are strengths within the Singapore economy that is serving it well.
For instance, the robust trading linkages and expanded sectors that Singapore has developed through the years will allow Singaporean firms to steer disruptions, and search for fresh and novel opportunities as well as substitute suppliers and alternative demand markets.
These peripheral bonds are best protected by a strong and well-implemented set of WTO rules, along with a network of Free Trade Agreements (FTAs) that Singapore will continue to develop and fortify.
An interview with Bloomberg in February 2019 showed Minister for Trade and Industry Chan Chun Sing saying that Singapore is positioning itself to remain neutral to both the US and China in the middle of escalating tensions between the world’s two largest economies.
“Our role is to keep asking ourselves how we can value-add to China and US at the same time,” Mr Chan said. “We play in a space where we want to remain neutral, remain open so that this is a place where the US, China, Europe can come, be engaged and conduct productive economic activities… that’s how we position ourselves.”
He added: “I don’t think we want to be in a position where we are only dealing with one and not the other, and I believe this is the same position for the rest of the Asian countries as well – everybody wants to be plugged in.” /TISG