Keynote Speech by Deputy Prime Minister and Minister for Finance Heng Swee Keat at the 12th Lujiazui Forum on 18 June 2020. DPM Heng delivered his speech via video message.
Read DPM Heng Swee Keat's Keynote Speech translated into Chinese below.
Let me first congratulate the Shanghai Municipal People’s Government for hosting this event as planned.
Let me also congratulate China for bringing the COVID-19 pandemic under control in China or it would not be possible to have this Forum today.
Singapore is honoured to be the Forum’s partner city this year.
World in Crisis
The global economy has encountered a major crisis almost every decade – the Asian Financial Crisis, the dot-com bubble, the Global Financial Crisis, and now, this COVID-19 pandemic. This pandemic is by far the most severe.
It has dealt a major demand and supply shock simultaneously to the global economy.
It is also accelerating major structural changes which were already taking place.
The road ahead is highly uncertain.
Some countries have brought the pandemic under control, but it is still raging in many parts of the world.
It is not clear when the pandemic will end, or when an effective vaccine can be available.
The huge uncertainty and disruptions to global supply chains are affecting investments and consumption.
For the financial sector, emerging risks will have to be closely watched, especially with the huge increase in sovereign and corporate debt.
Thankfully, the regulatory reforms following the Global Financial Crisis have led banks to build stronger capital and liquidity buffers, which will help them to weather this storm.
Post COVID-19, the world will not return to where we were before.
We will need to rebuild for a very different future.
It is therefore timely that we are discussing “New Starting Point, New Mission, New Vision” at this Forum.
Globalisation in a New Normal
Our New Vision starts with an old truth: An open and connected global economy enables all countries to develop and prosper.
Since global trading rules were established after the Second World War, world export had increased by more than 300 times.
The expansion of trade and investment has enabled economic growth of an unprecedented scale.
China has benefitted by being part of the global economy.
I was in Doha in 2001 when China made the significant step to join the World Trade Organization.
To harness the opportunities of globalisation, countries need to undertake domestic reforms to build up new strengths.
China’s policy direction of pursuing ‘reform’ and ‘opening up’ (改革开放) has enabled China to benefit from the global division of labour.
Opening up to competition drives structural changes and reforms. Reforms in turn strengthen competitiveness.
President Xi Jinping reaffirmed this direction in 2018, when he said “中国开放的大门只会越开越大” – China’s door will only open bigger.
In my visits to China, I saw how China has lifted hundreds of millions out of poverty.
But globalisation has not worked well for all parts of the world.
The pursuit of economic growth often comes at the expense of environmental sustainability.
The benefits of globalisation are unevenly distributed between the rich and poor, and across countries.
Consequently, many countries have turned inwards, putting the global system under stress.
Countries must work together to safeguard the global commons.
The COVID-19 pandemic shows that the virus respects no borders, and no one is safe unless all of us are safe.
In the same way, we need global solutions to many longer-term global challenges, such as climate change, food security and terrorism, and Singapore, China, Japan and many parts of Europe are facing a rapidly ageing population.
Nations must work closely with one another on these common challenges, learn from each other, and strengthen the global governance system.
Strengthening Global Cooperation
I am glad that countries are now coming together to share expertise, and to develop a vaccine against COVID-19.
Singapore participated in the Global Vaccine Summit to coordinate efforts across the globe.
China has similarly pledged that vaccine development in China, will be made a global public good.
This new starting point is important, because a world that is highly connected, but deficient in trust and cooperation, will be problematic.
All countries, particularly the major powers, must work out a new model of constructive cooperation to share global opportunities and global responsibilities.
This should be done within the framework of an open, and rules-based multilateral order where trade, capital and ideas can flow freely; where commitments and agreements are honoured; and where the interests of all countries, big and small, are taken into account.
We must evolve a new form of globalisation that works for all countries.
As we move towards recovery, countries are progressively re-opening our economies and borders.
Singapore and China recently launched a “fast lane” to facilitate essential business and official travel between our countries.
This is the first such arrangement that Singapore has with another country, and China’s first with a Southeast Asian country.
This “fast lane” signals our trust with each other’s public health management.
Our collaboration on managing the COVID pandemic builds on the depth and breadth of our bilateral relationship, built up even before we established diplomatic relations 30 years ago.
Our broad-based collaboration is overseen by the Joint Council for Bilateral Cooperation, co-chaired by Vice Premier Han Zheng and me.
Financial cooperation, in particular, is an important area to nurture.
Global finance is crucial in rebooting the global economy. It can shape a more sustainable and resilient future.
A key lesson from the Asian and Global Financial Crises is that finance is the life blood of the economy.
It must flow to productive uses, to support sustainable growth of the real economy, and improve the standards of living of our people.
The misallocation of capital, or worse, the use of creative accounting for quick results, will eventually fail.
Looking ahead at the needs of the real economy in the coming decades, let me suggest three areas.
The first is in meeting the infrastructure needs of developing Asia, which is estimated at US$1.7 trillion annually.
China’s Belt and Road Initiative can contribute to the development of sustainable infrastructure, based on an inclusive, transparent and market driven approach.
Countries can also work in partnership with Multilateral Development Banks, such as the World Bank, the ADB and AIIB.
The second area is in green financing, to drive sustainable change to tackle environmental and climate risks. There is good potential.
China’s estimated annual demand for green financing is about US$600 billion, and Southeast Asia’s is about US$200 billion.
The third promising area is FinTech and digital finance.
The digital revolution will reshape finance, by lowering transaction costs and improving access.
Through digital finance, we must also aim for greater financial inclusion, which helps to reduce poverty.
I am glad that these areas will be discussed at this Forum.
Singapore and Shanghai are working in close collaboration on many areas.
Last year, I was here to launch the Singapore-Shanghai Comprehensive Cooperation Council to further strengthen our longstanding partnership.
As international financial centres, our two cities are well-placed to contribute to the global efforts, to promote cooperation, and to forge new channels of connectivity.
RMB cooperation is a key feature of our bilateral relations.
Singapore is one of the largest RMB centres outside Greater China.
Global usage of the RMB has grown, driven by investments and cross-border trade.
Our two cities can further deepen our collaboration on cross-border RMB initiatives, to better support trade and investment flows between Southeast Asia and China.
We can also strengthen capital market linkages, and expand digital and green finance cooperation between our two cities.
With the many potential areas of stronger collaboration,
I am happy to announce that the Monetary Authority of Singapore will be setting up its second China representative office in Shanghai this year.
COVID-19 is the crisis of our generation.
The pandemic will eventually end.
But its impact on our societies, our economies and on the global system will be long lasting.
What the world would look like after the pandemic, depends on each and every one of us.
I am heartened that members of the international community are pooling our efforts to tackle this unprecedented crisis together.
The global financial community is also stepping up.
Singapore stands ready to work with all like-minded countries to recover from the pandemic.
Let’s use this crisis as a New Starting Point, to embark on a New Mission, and to forge a New Vision for our collective future.
I wish you all a successful Luijiazui Forum.
Chinese Translation of DPM Heng Swee Keat's Keynote Speech at the 12th Lujiazui Forum on 18 June 2020
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