“Unlike the Cold War, the US and China compete within the same interconnected and interdependent economic system,” said Mr Heng, who is also the coordinating minister for economic policy.
“At best, neither can live up to their maximum economic potential. There could be a decline in living standards, not only for the US and China, but also for the rest of the world. At worst, economic decoupling is a slippery slope to strategic miscalculation and disastrous conflict.”
Mr Heng said that rebalancing will take time, stressing that both countries should not allow the opportunities for mutual progress to be overshadowed by strategic mistrust.
“The US and China will compete where they need to, but it is critical that safeguards are in place to ensure that competition does not drift off course in a conflict,” he said.
“Any clash between the world’s two largest economies will only come at the expense of themselves and the world.”
Heng urged them to work together where appropriate, pointing out that they share “many areas of complementarity” in economic development, even though they are at different stages of development.
“By working together to exercise global leadership to address shared challenges, and leveraging their vast resources of talent, capital and innovation, they can take charge of international progress and development,” he added. .
THE ROLE OF SINGAPORE
Singapore can contribute in this age of complexity by continuing to strengthen a rules-based multilateral system so that all countries, large and small, have their voices heard and sovereignty is respected, Mr Heng said.
“As the world evolves, so must the global rules and standards that govern our actions. However, the process of brushing up on these rules often takes a long time, especially when global leadership is challenged,” he said.
“Individually, not each of us may be able to shape the course of global action. But by working together collectively, we have freedom of choice and can create new building blocks for meaningful change.”
Singapore, for example, has had an impact on global trade, Mr Heng said, referring to how Singapore is a pioneering member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
The CPTPP grew out of a smaller trade agreement – called P4 – between Singapore, New Zealand, Brunei and Chile, reflecting a desire for greater economic integration and further liberalization of trade and investment at the global level.
Since then, more economies have applied to join the CPTPP, Mr Heng said, and this has fueled global change. It is also “remarkable” that China has recently indicated its willingness to join the CPTPP, he said.
“The P4 example shows how a few determined small states can create building blocks over time to catalyze meaningful changes in global trade,” he added.
US SHOULD BE “ECONOMICALLY INVOLVED”
The US, Mr Heng added, cannot afford to be absent from the region’s evolving economic architecture if its security presence is to continue bringing peace and stability to the region for decades to come.
“While the US has revived the Quad and stepped up security cooperation through AUKUS, it is just as, if not more important, that the US is economically involved,” he said. “If it’s not through the CPTPP, it must have an equally substantial alternative.”
US President Joe Biden announced an Indo-Pacific Economic Framework at his virtual summit with ASEAN leaders in October, Mr Heng noted.
US Trade Representative Katherine Tai then said during a visit to Japan on Nov. 18 that the US could establish a new Asian economic framework with allies and “friendly” nations as early as next year, NHK public television reported Thursday.
“We look forward to the details and substantial and inclusive US involvement in the region,” said Mr. Heng.
ASEAN MUST WORK WITH OTHER COUNTRIES
Outside of the US and China, Mr Heng said Southeast Asia should strengthen ties with India, South Asia, Australia and New Zealand, while remaining open to Latin America and Africa.
In particular, Mr Heng said that the Association of Southeast Asian Nations (ASEAN) should work with any country that wishes to work with it where it is in its interest to do so.
“We look forward to greater economic integration when the RCEP (Regional Comprehensive Economic Partnership) comes into force, making it the largest free trade agreement in the world,” he said.
“We must continue to welcome global investment to help the region realize its potential.”
To achieve this, Mr Heng said ASEAN must maintain its credibility, with the bloc’s position on Myanmar showing it can withstand external pressures.
“We have taken a position of principle to achieve consensus and are urging other countries to do the same,” he said.
DECREASING SUPPORT FOR GLOBALIZATION
Nevertheless, Mr Heng acknowledged that support for globalization has declined in recent years as the benefits of the global economy are not well distributed within and between economies.
“The acute pain felt by dislocated workers and the fear of wage stagnation have come to dominate sentiments about globalization,” he said.
“Domestic discontent has hampered the ability of governments to engage in free trade and agree much-needed reforms in the multilateral system and institutions.
“COVID-19 has further deepened the social fault lines. The lack of unity has made it more difficult for governments to implement international agreements coherently.”