Keynote Address by Deputy Prime Minister and Coordinating Minister for Economic Policies Heng Swee Keat at the Caixin Asia New Vision Forum on 12 June 2023.
Ms Zhang Lihui, President, Caixin Media,
Ms Hu Shuli and Professor John Thornton,
Co-chairs of the Caixin Asia New Vision Forum,
Ladies and gentlemen,
A very good morning, and to all our overseas guests, a warm welcome to Singapore!
Let me first congratulate Shuli and her team at Caixin Global for launching this inaugural Asia New Vision Forum, and bringing together an excellent list of speakers from Asia and beyond, to meet in person and engage in deep dialogues on the future of Asia.
Singapore is just a little red dot on the map, but we place great value on building understanding and connections, so we are always happy to serve as a platform to bring people, businesses, and culture together.This inaugural forum covers many important issues – from financial stability, global trade and mobilising capital; to harnessing new opportunities in technology and promoting sustainable development.
Underlying these topics is the critical question of what Asian countries need to do, individually, and in partnership with the global community, to achieve inclusive, sustainable development.
I hope this new Forum will catalyse dialogues and fresh thinking on these critical issues.
We are gathering at a time of great global uncertainty.
The global economy is facing a high inflation, resulting from supply chain disruptions, the Ukraine War, high energy prices, and geopolitical tensions. This has dampened the post-COVID recovery.
International financial institutions remain intact for now, but the collapse of some banks has reminded us of the importance of financial stability.
The tone of global cooperation has shifted – the past decades of globalisation is slowing and even reversing. We are hearing more talk of decoupling.
Supply chains are fragmenting as countries and companies prioritise resilience to manage geopolitical and pandemic risks.
Finally, there are concerns that we may miss the window to tackle climate change, which is a global existential issue.
At the same time, there are bright spots.
The pace of science and technological innovation has accelerated. This holds hope for building better lives and a better world, be it through biotechnology, green technology, digitalisation, or AI.
There are also strong fundamentals in Asia’s growth story – South Asia and Southeast Asia have youthful populations and a growing middle class.
In the coming years, Asia can reap population and consumption dividends, and offer strong growth and investment prospects.With this mixture of hopefulness and uncertainty, your deliberations over the next two days will be valuable. So let me start by outlining a few key issues.
The most critical pre-condition for Asia and the world to continue growing and making progress, is peace and stability.
In this regard, the US-China bilateral relationship is the most important relationship in the world.
In 2000, the US supported China’s entry into the WTO. That cooperation has since morphed into a trade war, a tech war, and a broader strategic competition.
Sharp words have been traded, and tensions have risen.
What does this portend?
Let me draw on the wisdom of two men who are widely respected for their understanding of the US and China – Mr Lee Kuan Yew and Dr Henry Kissinger.
In a recent interview, Dr Kissinger said that “we are on the path to great power confrontation”, because “both sides have convinced themselves that the other represents a strategic danger”.
The most dangerous flashpoint in the region is the Taiwan Strait, where there is the risk of accident or miscalculation.
When Mr Lee was asked a question about the US and China in 2011, his observation was that China’s growth could challenge America’s pre-eminence, so competition would be inevitable, but “it need not lead to conflict”.
But Mr Lee also warned that “once you start at whatever level, conflict will likely escalate, and the losing side will eventually have to use nuclear weapons in a bid to limit the damage. That will be the beginning of the end”. This is why, as Mr Lee said, both sides must “do everything they can to avoid even minor conflicts”.
While we are now at an uncomfortable and indeed dangerous point. But all of this is not an inevitability. It is still possible to step away from confrontation and conflict, and both sides must do so by building strategic trust.
Today’s world is highly connected and interdependent.
China is the largest trading partner for over 120 countries, while the US has significant investments in Singapore, Asia, and around the world.
Unbridled and unchecked competition with no guardrails will generate great costs and hardship, across the world. It will be a big step backwards for all countries.
So we should all welcome the recent positive signs that China and the US are serious about improving ties.
Communications between officials on both sides have grown over the past few months, and Secretary Blinken is expected to visit Beijing this week. We look forward to a good outcome.
Many countries – Singapore included – welcome this because a fragmented and unstable world leaves all of us worse off.
Countries in ASEAN and around the world do not wish to choose sides, as most have deep linkages with both major powers.
I have touched on the most critical pre-condition for having peace and stability in Asia, and the importance of the US and China resetting their relations.
But Asia and the rest of the world must also take active steps, to bring about greater collaboration.
Let me suggest three areas to pursue.
Inclusive, rules-based framework for trade and investments
First, we must continue to uphold an open, inclusive, and rules-based framework, to drive greater trade and investment.
Notwithstanding the pushback against globalisation in some parts of the world, the desire to pursue greater economic integration remains strong within Asia and some countries outside Asia.
This is anchored in the belief that free trade and greater economic integration, will continue to uplift economies and populations.
Within ASEAN for instance, we have been working hard to build the ASEAN Economic Community and pursue a common market of over 650 million people.
Individually and as a group, ASEAN countries have negotiated trade agreements with partners in Asia and around the world.
ASEAN’s FTAs with China, India, Japan, Korea, and Australia and New Zealand have brought mutual benefits, and deepened ties.
In recent years, many ASEAN countries are taking part in new regional trade agreements like RCEP (Regional Comprehensive Economic Partnership), CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership), and the Indo-Pacific Economic Framework (IPEF).
The modalities may look different from the previous iterations, but if these new arrangements could serve as pathfinders and help build confidence for broader global involvement eventually, then we must continue to pursue them.
International financial flows
Second, beyond trade, we must promote greater flows of financial resources across the world, to catalyse economic development and innovation. This must be underpinned by strong international financial institutions and cooperation.
It is important that there are several sessions addressing financial stability and development at this Forum.
In the last 25 years, the region has gone through the Asian Financial Crisis, the Global Financial Crisis, and the latest COVID-19 crisis.
I was running the Monetary Authority of Singapore when the Global Financial Crisis erupted, and remember how governments around the world had to take extraordinary actions, to avoid a financial and economic meltdown.
Since then, we have strengthened macro- and micro-prudential measures and improved risk management. But more needs to be done. The recent bank failures show that crisis remains a recurring feature of financial flows.
Sentiments can change quickly, fuelled by the speed of today’s communications, and the risk of fake news. Fear and financial contagion can spread even more swiftly.
This is why all players must continue to upgrade risk management measures and remain vigilant.
On the other hand, the efficient intermediation of capital to productive uses can catalyse growth and address global challenges.
Within Asia, countries like Japan and China have significant pools of savings. If these can be mobilised to productive uses and to support the real economy, it can bring benefits across the region and the world.
Multilateral and regional institutions like the World Bank, the Asian Development Bank and the Asian Infrastructure Investment Bank will play important roles in partnering governments and the private sector to mobilise capital and allocate risks efficiently and appropriately.
Another financial flow we should promote is venture capital and private equity funding, to support start-ups that are riding the waves of scientific and technological innovation.
For example, in 2021, the value of venture capital market deals across ASEAN was a record US$20 billion.
As the pace of innovation accelerates, venture capital and private equity funding will be key to catalysing this engine of growth.
Tackling Common Challenges
The third area that all countries can and must work together on, is addressing common challenges.
We may have overcome COVID-19, but the next pandemic is not an “if” but a “when”. We must build on the linkages and practices that were established during this pandemic, to better prepare for the next one.
The responsibility of keeping our populations safe and healthy is a universal one. In a highly inter-connected world, this is best achieved through collaboration across borders, sectors, and organisations.
Going beyond pandemics, another global health issue that could benefit from collaborative action is ageing and the growing burden of chronic diseases.
While respective countries tackle the different dimensions of ageing – from research, to drug development and community interventions – we could do faster and do better by exchanging ideas, sharing expertise and co-developing solutions.
We must also confront climate change with renewed effort and collaboration. The impetus for collective action has grown more urgent.
Across the world, the impact of climate change and extreme weather patterns is tangible, affecting lives and livelihoods.
To catalyse the global energy transition and have a shot at the 1.5-degree Celsius target, the world needs new technological innovations and significant investments to be mobilised across borders.
Like pandemics, climate change does not discriminate. It will affect us all.The faster we can mobilise collective action, the better.
Pulling the three threads together, what we must work towards is a new global architecture that promotes inclusive and sustainable development.
We are not starting from zero base. The 2015 United Nations’ Sustainable Development Goals (SDGs) provided a framework of 17 goals covering the social, economic, and environmental domains.
We are now midway to the SDG’s 2030 timeline, but the progress is far from ideal. We must do better.
Apart from valuing our common humanity, there is a structural and strategic argument for inclusive development, which is demographic-driven. Let me reiterate the points that John Thornton made earlier.
The current strategic competition is dominated by the two largest economies – the US and China. They hold around 40% of global GDP today.
But existing cleavages, such as those between developed and developing countries remain. Over time, these could deepen.
By 2050, we expect the world population to grow by another 2 billion. More than half of this increase is expected to come from countries in Asia and Africa.
In other words, a demographic boom from the Global South will surely affect global power dynamics.
If we predict that come 2050, the US and China will hold 50 to 60% of global GDP, how might this concentration of wealth sit with the demographic trajectory?
There are already rumblings, such as calls to reform the UN Security Council and revamp the Bretton Woods institutions. It is driven by the argument that current global institutions and architecture do not equitably reflect the realities of today’s world.
These are difficult issues, and much can be said about it. The point is that we must not only fixate on the short-term view of strategic competition.
The rapid pace of technological innovation could accelerate and exacerbate inequalities, since technology tends to reward the able far more sharply.
If we do not address underlying structural impulses, these will add new dimensions to the strategic competition, and in turn grow the risk of instability and conflict.
The pursuit of an inclusive and sustainable global development agenda must continue in earnest.
It is every country’s interest, especially the US and China, to help develop a new architecture that enables inclusive and sustainable development.
Globalisation, underpinned by free trade and an open multilateral system, has uplifted economies and populations across the world.
Looking ahead, even as the complexion and modality of global cooperation evolve, the fundamental imperatives remain unchanged.
Just as trade had and continues to uplift millions, science and technology will be the next key to building better lives and livelihoods, for our respective populations, and across the world.
We are better off unlocking these possibilities together – not just the US and China, but across ASEAN, Asia, Europe and the rest of the world.
Let me conclude. I started out by highlighting the importance of peace and stability for regional and global growth, and the dangers posed by strategic competition slipping into confrontation and conflict.
I highlighted three areas where we could collaborate, to increase trust, facilitate growth, and pursue inclusive and sustainable development.
Countries across the world must do our part to enable this, by working on a forward-looking agenda to tackle shared challenges.
But key to this is leadership from the US and China – with the two biggest economies of the world involved, we can make meaningful progress and break new ground together.
Competition is understandable, but it does not have to be zero-sum, nor is it the opposite of collaboration. Competition and collaboration can co-exist.
I am hopeful that over time, we will ease into a new pattern of engagement and collaboration that will continue to facilitate growth and prosperity across the world.
In the meantime, let us all do our part:
As individual countries forging cooperation;
As regional partners pursuing mutually beneficial opportunities; and
As colleagues and counterparts, meetings at forums like these, to deepen understanding, build trust, and find practical ways forward.
This way, we can collectively work towards a new vision of a peaceful, stable and prosperous world, in which Asia can continue to thrive.
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