Lee Hsien Loong (Singapore Prime Minister) – Future of Trade | Bloomberg New Economy Forum (Nov 2020)
Chapters
00:01:11 Emerging U.S.-China Relations in the Biden Era
America’s Changing Perspective: America’s shift to a more narrow definition of its interests has impacted its relationships in the Asia-Pacific region. Previous administrations viewed America as having a broader interest in regional stability and fostering an orderly scheme where all countries could prosper. It will take time for America to return to such a position and convince others of its commitment.
The Impact of Trump’s Policies: Certain elements within the Trump administration aimed to make moves that would be difficult for subsequent administrations to reverse, setting the tone for the US-China relationship for years to come. Imposing punitive tariffs creates a new starting point for negotiations, limiting the options for future administrations. Steps taken on technology and defining China as a strategic threat have significant consequences and will shape the relationship.
The Role of Language: Trump’s focus on “America First” and his rhetoric have influenced perceptions of America, particularly among European and Asian allies. Allies understand the need for America to prioritize its interests but must make calculations based on this reality.
A Coalition of Democracies: The idea of a coalition of democracies, including Singapore, Indonesia, Japan, and South Korea, has been discussed as a potential framework for cooperation. However, forming such a coalition against China faces challenges, as many countries have economic ties with China and seek to work with various partners.
The Trans-Pacific Partnership (TPP): The CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership), which excludes the US, remains active with 11 participating countries. The US is unlikely to rejoin the CPTPP in the near future due to domestic political considerations, despite the potential benefits of the agreement.
Biden’s Approach: Biden’s familiarity with Xi Jinping could lead to personal engagement at the top, which is important for managing the US-China relationship. However, the growing consensus in the US that China is a strategic threat will make it challenging for any administration to disregard and return to previous policies.
China’s Perspective: China is not eager for a collision with the US but may be unwilling to make significant concessions. China’s domestic considerations will likely take precedence over international balance. While China may agree to changes in the global system in principle, negotiating a new dispensation with the US will be challenging.
00:12:04 China's Evolving Role in Global Trade and the Future of Hong Kong
China’s Narrative: China’s reforms and liberalization over the last 30-40 years have led to increased affluence and power. China’s economic emergence has benefited its partners through trade, manufactured goods, and consumption. The Chinese narrative emphasizes the win-win nature of these developments and questions the need for further improvements.
Hong Kong Situation: Recent developments in Hong Kong, including the resignation of pro-democracy figures, are seen as a clampdown on freedoms. The Chinese government has enacted legislation in China and Hong Kong to address the situation, aiming to maintain stability and confidence while preserving Hong Kong’s prosperity. Concerns remain in Hong Kong about the impact of these actions, and a new normal is expected to emerge, balancing stability, economic growth, and freedoms.
RCEP Trade Agreement: The RCEP trade agreement, soon to be signed, is a different animal compared to the TPP. RCEP involves a larger number of economies and has a broader scope, including services and e-commerce. While the RCEP is seen as less ambitious and comprehensive than the TPP, it is expected to have a significant impact on regional trade and cooperation.
00:16:15 Exploring Regional Trade Agreements and the Future of the Internet
Key Points and Insights: The Regional Comprehensive Economic Partnership (RCEP) is a significant step towards reducing trade barriers and promoting regional integration in Asia, covering one-third of the global population and GDP. However, it does not go as deep as other trade agreements and lacks mechanisms for dealing with issues like China’s treatment of Australian exporters. The World Trade Organization (WTO) has rules and adjudication mechanisms for trade disputes, but it has been deliberately sidelined by the Trump administration. The Biden administration is expected to revive the WTO’s role in promoting fair and objective trade rules. The separation of trade from other disputes and issues has been a guiding principle in global trade since the Second World War. However, this distinction can be blurred, leading to disputes over phytosanitary and medical requirements, as well as political motivations. Countries’ reputations for fair and transparent trade diplomacy are important, and avoiding trade-related retaliation for other disputes is crucial for maintaining positive international relations. The possibility of regional blocks and divisions in the global trading system exists, but trans-Pacific and trans-Atlantic trade links are too substantial to be cut off entirely. The bifurcation of technology, particularly in the internet and digital infrastructure, poses a risk of creating separate and controlled networks. China’s restrictions on Western tech companies and the rise of domestic alternatives exemplify this trend. Absolute security in digital systems is not achievable, and practical approaches are necessary to manage risks and vulnerabilities. Countries must balance security concerns with the benefits and purposes of using various systems. The ideal of a seamless and censorship-free internet is unrealistic, as gatekeepers and bad actors will always exist. Connectivity will be improved compared to the past, but a fully integrated network is unlikely. Smaller countries may face challenges in accessing new vaccines due to competition from larger countries. Singapore’s deal with Acura for a particular vaccine and Pfizer’s involvement in vaccine production are examples of how smaller countries can secure access to vaccines.
00:24:58 Discrepancy in COVID-19 Management and Outcomes: Asia vs. West
Singapore’s Vaccination Strategy: Singapore has sought arrangements with multiple vaccine makers to avoid being last in line for vaccine distribution. The goal is to optimize vaccine distribution globally, but it will be challenging due to the large number of countries involved. Vaccines will likely become more affordable in the future as technologies improve and economies of scale come into play.
Asian Countries’ Success in Managing COVID-19: Asian countries have been more successful in getting their populations to comply with necessary measures like wearing masks and social distancing. This compliance has led to lower infection and fatality rates compared to Western countries, where people have been more resistant to restrictions. Singapore’s elderly population could have been vulnerable, but the country has managed to keep community cases low and provide proper medical care to migrant workers in dormitories.
Challenges Facing Singapore: Singapore’s challenge is to open up its borders to tourists and business travel while managing imported cases and potential outbreaks within the population. Unlike countries like China, Singapore cannot remain in splendid isolation due to its economic reliance on global trade and tourism.
00:30:40 Navigating Economic Challenges and Policy Responses in Times of Crisis
Different Government Performance: The efficiency of governments varies and is not solely a measure of their inefficiency. Even exceptional governments, like those in Germany and Switzerland, faced challenges in handling the COVID-19 pandemic.
Uncertainties of the Pandemic: The COVID-19 pandemic presented immense challenges to societies, governments, and individuals. Making rational decisions in such uncertain times is difficult, especially when reliable information is lacking. The unfolding events often prove to be worse than anticipated, requiring adaptation and adjustment.
Singapore’s Economic Recovery: Singapore utilized past budget surpluses, equivalent to 20 years’ worth, to address the economic impacts of the pandemic. The country aims to return to prudence and a balanced budget but recognizes the challenges posed by COVID-19 and the need for continued spending.
Budgetary Constraints: The opposition may push for increased spending from the reserves, given their substantial size, leading to potential deviations from fiscal discipline.
Budget Outlook: Singapore expects to continue running deficits in the upcoming February budget due to the ongoing pandemic and economic challenges. The government aims to stabilize the economy and support employment through counter-cyclical spending.
Industry Impact: Sectors like aviation, tourism, and entertainment face prolonged recovery timelines, requiring continued support to prevent further economic disruptions.
Public Health and Economic Balance: Prioritizing public health measures is crucial to prevent major COVID-19 outbreaks and subsequent economic consequences.
Long-Term Economic Planning: While addressing immediate and medium-term challenges is essential, Singapore aims to return to balanced budgets once the pandemic subsides.
Impact of COVID-19: The COVID-19 pandemic has significantly impacted the way the world is viewed, highlighting the interconnectedness and vulnerability of societies.
00:34:56 Global Uncertainties and Evolving International Relations
Psychological Impact of COVID-19: The pandemic has shifted priorities from global trade and technology to ensuring people’s safety and well-being. The unpredictable nature of events highlights the importance of resilience and adaptability in planning.
Biden’s Opportunity for Global Leadership: Biden has a chance to reassert American leadership, especially in Asia, following the Trump administration’s withdrawal from global engagement. However, he faces numerous challenges in Europe, Russia, and the Middle East, making it difficult to focus solely on Asia.
Trump’s Legacy and Biden’s Challenge: Trump garnered significant support, indicating the persistence of the pressures he represented in American politics. Biden must address the bitterness and division caused by Trump’s presidency and work towards reconciliation between different segments of American society.
Potential for US-China Relations Improvement: Some Chinese commentators initially saw Trump’s election as an opportunity to expand their influence due to perceived American incoherence. However, China has realized that a coherent US policy, even if not fully aligned with China’s interests, is preferable to chaos and unpredictability. Biden’s election may present a chance for a renewed attempt at improving US-China relations, but it faces challenges due to domestic priorities on both sides.
Domestic Priorities Drive Foreign Policy: Domestic considerations heavily influence the foreign policy decisions of both the US and China. While a peaceful international environment is desired, it rarely drives domestic policies or leads to adjustments that promote a stable global order. This can result in miscalculations and unexpected developments in international relations.
Micklethwait’s Retirement and Barack’s Age: Micklethwait plans to retire at the age of 70 in February 2022. The recent election of a 78-year-old president in Tanzania prompts reflection on whether Micklethwait might consider extending his tenure.
00:40:54 Improving Global Health Surveillance to Prevent Future Pandemics
Importance of a Global Surveillance Network: Prime Minister Lee Hsien Loong emphasizes the need for a global institution and surveillance network to detect and respond to future pandemics early on. The WHO and the US CDC had monitoring stations to pick up signs of emerging diseases, but they were insufficient. The COVID-19 pandemic highlights the importance of early detection and reaction to pandemics.
Structural Issues in Western Healthcare Systems: Prime Minister Lee attributes the poor performance of Western governments in handling the pandemic to structural issues in their public health systems. A system designed for the rich and the old is inadequate in addressing pandemics that affect a wide range of the population.
Role of Past Experience in Handling Pandemics: Prime Minister Lee credits Singapore’s success in managing COVID-19 partly to the experience gained from the SARS outbreak. He also acknowledges the importance of luck in dealing with pandemics.
Factors Contributing to Successful Pandemic Response: Prime Minister Lee believes that governments that have done well in education, life expectancy, and intelligent infrastructure are more likely to handle pandemics effectively. He suggests that the COVID-19 pandemic can be seen as a surprise examination, and countries that had done the work beforehand performed better.
Abstract
Navigating a Shifting Global Landscape: America, China, and the New Asian Dynamics
In the increasingly complex and interconnected world of international relations, particularly in Asia, the United States and China stand as pivotal players whose actions and policies shape not only their bilateral ties but also the broader regional and global order. This article examines the evolving dynamics of US-China relations, the role of key trade agreements, the impact of the COVID-19 pandemic, and the intricate dance of diplomacy and domestic politics that underpin these developments.
America’s Changing Role and Its Impact on US-China Relations
The “America First” stance of the Trump administration marked a significant departure from the US’s traditional approach in the Asia-Pacific region, prioritizing unilateral actions over fostering stability and alliances. This shift has resulted in a strained relationship with China, characterized by punitive tariffs and a general atmosphere of mistrust. The onus now falls on the Biden administration to rebuild America’s credibility as a reliable partner in Asia, a task complicated by the altered landscape left by its predecessor.
The Challenge of Forming a Coalition Against China
Forming a coalition of democracies to counter China’s influence in the region faces significant obstacles, mainly due to the economic interdependencies many countries have with China. A more nuanced approach that combines cooperation and dialogue is essential for maintaining regional stability and addressing global challenges.
The Trans-Pacific Partnership’s Ongoing Relevance
Despite the US’s withdrawal, the Trans-Pacific Partnership (TPP) remains a significant trade agreement among its 11 member countries. The current US political climate, however, makes rejoining the TPP unlikely in the near term, thereby leaving a gap in America’s economic engagement in the region.
Biden’s Presidency and Potential Shifts in US-China Relations
President Biden’s prior interactions with Chinese President Xi Jinping could provide an avenue for personal engagement and dialogue. Nonetheless, the growing consensus in the US that views China as a strategic threat may limit Biden’s ability to pursue a cooperative stance.
China’s Perspective and Approach to Compromise
China’s emergence as a global economic power calls for adjustments to the global order. However, domestic priorities and a hard-bargaining approach may hinder China’s willingness to make significant concessions in its international engagements.
The Importance of Bilateral Negotiations
For the US and China to find a new equilibrium in their relationship, bilateral negotiations focusing on common ground and specific grievances are critical. Such negotiations are pivotal in forging a new balance of interests and responsibilities.
China’s Economic Emergence and Its Global Impact
China’s economic liberalization has led to increased affluence, power, and global connectivity. Its narrative underscores the mutual benefits of its growth and questions the need for further adjustments in its approach to international relations.
Hong Kong’s Political Developments
The political developments in Hong Kong, particularly the pro-democratic resignations and China’s legislative responses, highlight the ongoing tension between maintaining stability and respecting the city’s unique system. These developments have raised global concerns about diminishing freedoms in Hong Kong.
RCEP and TPP: Divergent Paths in Regional Trade
The Regional Comprehensive Economic Partnership (RCEP) and the TPP represent two distinct approaches to regional trade. RCEP focuses on trade facilitation and cooperation among a broader scope of economies, while the TPP aimed for deeper integration among its members.
The Role of WTO and Challenges of Trade Diplomacy
The World Trade Organization (WTO) is crucial in upholding fair and objective trade rules. However, the blending of trade and non-trade issues often leads to protectionist measures, challenging the principles of free and fair trade. In this context, countries’ reputations in trade diplomacy are becoming increasingly significant.
The Digital Age: Security, Internet Ideals, and Technology Bifurcation
Absolute security in the digital age is unattainable, necessitating practical approaches to risk management. The ideal of a seamless, censorship-free internet is increasingly unrealistic, and the world faces the risk of dividing into regional technology blocks.
COVID-19: Vaccine Accessibility and Distribution Challenges
The pandemic has underscored the challenges in vaccine distribution, with smaller countries struggling to access vaccines amidst larger nations’ prioritization. The WHO advocates for a rational distribution scheme, but reality often sees big countries prioritizing their populations. Singapore’s strategy of diverse vaccine partnerships and preventive measures has been notable in this context.
Singapore’s Pandemic Response: A Case Study
Singapore’s handling of the COVID-19 crisis, particularly its success in managing migrant worker cases and its low fatality rates, contrasts with the struggles faced by some Western countries. This success is attributed to the city-state’s efficient governance, prior experiences with similar crises, and public compliance with health measures.
The Fiscal and Psychological Impact of COVID-19
The pandemic has necessitated a shift in priorities from globalization and trade to public safety and economic stability. Governments worldwide, including Singapore, have used reserves to manage the crisis, indicating a need for a psychological shift towards fiscal prudence.
Biden’s Global Leadership Opportunity and China’s Cooperation Potential
The Biden administration has the opportunity to reassert American leadership on the global stage. China, initially viewing Trump’s presidency as an opportunity to expand its influence, now sees the value of a coherent American foreign policy for global stability. However, both nations prioritize domestic concerns, which could lead to miscalculations in international affairs.
Governance Challenges and Micklethwait’s Retirement
Effective governance varies across countries, and even competent governments face challenges, as evidenced by the pandemic. John Micklethwait, Editor-in-Chief of The Economist, plans to retire in 2022, reflecting a broader trend of leadership transitions amidst global challenges.
Singapore’s Approach to COVID-19: Vaccination, Compliance, and Challenges
Singapore has pursued arrangements with multiple vaccine makers to optimize global vaccine distribution, though this will be challenging due to the large number of countries involved. Vaccines are expected to become more affordable as technologies improve and economies of scale are realized.
Asian countries, including Singapore, have been more successful in getting their populations to comply with necessary measures like mask-wearing and social distancing, leading to lower infection and fatality rates compared to Western countries. Singapore’s elderly population could have been vulnerable, but the country has kept community cases low and provided proper medical care to migrant workers in dormitories.
Singapore faces the challenge of opening its borders to tourists and business travel while managing imported cases and potential outbreaks, a necessity due to its economic reliance on global trade and tourism.
Government Challenges, COVID-19 Impact, and Economic Recovery
Governments vary in efficiency, and even those regarded as exceptional, like Germany and Switzerland, have faced challenges in handling the COVID-19 pandemic. The uncertainty of the pandemic has made rational decision-making difficult, especially in the absence of reliable information, often leading to worse-than-anticipated events and necessitating adaptation and adjustment.
Singapore has used past budget surpluses to address the economic impacts of the pandemic, aiming to return to a balanced budget despite the ongoing challenges posed by COVID-19. The opposition may advocate for increased spending from the reserves, which could lead to deviations from fiscal discipline.
The upcoming February budget in Singapore is expected to continue running deficits due to the pandemic and economic challenges. The government aims to stabilize the economy and support employment through counter-cyclical spending. Sectors like aviation, tourism, and entertainment face prolonged recovery timelines, requiring continued support.
Prioritizing public health measures is crucial to prevent major outbreaks and subsequent economic consequences. Singapore aims to return to balanced budgets once the pandemic subs ides, highlighting the interconnectedness and vulnerability of societies.
John Micklethwait Discusses the Impact of COVID-19 and the Future of US-China Relations
The pandemic has shifted priorities from global trade and technology to people’s safety and well-being. Biden has an opportunity to reassert American leadership, particularly in Asia, despite challenges in Europe, Russia, and the Middle East.
The election of Trump reflected the persistence of the pressures he represented in American politics. Biden must address the division caused by Trump’s presidency and work towards reconciliation. China initially saw Trump’s election as an opportunity to expand its influence but now recognizes the value of a coherent American foreign policy. Biden’s election may offer a chance to improve US-China relations, though domestic priorities on both sides pose challenges.
Domestic considerations heavily influence the foreign policy decisions of the US and China. While a peaceful international environment is desired, it rarely drives domestic policies or leads to adjustments that promote a stable global order. This can result in miscalculations and unexpected developments in international relations.
Micklethwait plans to retire at the age of 70 in February 2022. The election of a 78-year-old president in Tanzania prompts reflection on whether Micklethwait might consider extending his tenure.
Navigating a Complex Future
The complexities of US-China relations, the evolving landscape of trade agreements, the ongoing challenges of the COVID-19 pandemic, and the intertwining of domestic politics with international diplomacy paint a picture of a world in flux. As countries like the United States and China navigate this landscape, their decisions will have profound implications for global stability, economic recovery, and the future of international relations. The need for nuanced, cooperative approaches in dealing with these challenges cannot be overstated, as the world looks towards a future marked by uncertainty but also opportunities for renewed collaboration and understanding.
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