Singapore “sandwiched” in the escalating China-US trade talks: Will Singapore take sides?

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Photo: You Tube screengrab from https://www.youtube.com/watch?v=93sNIwoiQqc

The effort to instigate a continuation of the dispute by US President Donald Trump and his administration, and the strong possibility of the US President extending his presidency to a second term unless impeached, hints that the trade war will continue into the infinite future.

Singapore’s Prime Minister Lee Hsien Loong, prior to the advent of 2019, already foresaw that day when Southeast Asian nations will be compelled to decide which side they are on between the escalating trade talks of China and the United States.

“If you are friends with two countries which are on different sides, sometimes it is possible to get along with both, sometimes it’s more awkward when you try to get along with both,” PM Lee was quoted as saying.

“I think it’s very desirable for us not to have to take sides, but the circumstances may come when ASEAN may have to choose one or the other. I am hoping that it’s not coming soon,” Lee added.

Lee’s statements insinuates a profound sense of agitation in the region, where concern is mounting about being caught in the middle of rising economic and security rivalry between the two powers.

At present, so much is being deliberated upon with regard to the US and China finding solutions to their continuing trade war. With representatives from both countries meeting, people on the sidelines appear optimistic about a resolution and an end to the controversy. However, those privy to the talks are not that optimistic.

This trade war according must be viewed as a strategy in the overall China containment scheme; the ultimate aim of the US is to totally stop China’s rise.  On the other hand, from a Chinese perspective, winning means the ability to remain standing, thus, and it is hard to see China submitting.

Where does that leave Singapore?

Realistically, the trade war is rearranging the supply chains of Singapore-based companies as the city state is more exposed to the worsening global trade picture than most nations.

Obviously, Singapore’s exports will be affected by higher tariffs. It is not good for the country especially in the solar panels and electronic products sector.

Also, the trade war will lead to “distractions” in the global supply chain, which Singapore is “very plugged into”.

When asked by media how Singapore would choose if it were forced to take sides in this tension, Deputy Prime Minister Teo noted that China is a major trading partner of ASEAN and accounts for about 17% of its trade.

However, he added: “But I think the preference for all countries in the world, is to be able to have a constructive relationship, maintain that multilateral trading system and an open trade. That is much better for everyone, including the US and China.”

A very safe answer indeed.