Introduction
1. In the spirit of today's hyper-connected world of webinars, instead of "Good Afternoon" from Singapore, may I wish everybody "Good Day" to all of you joining us from around the world.
2. The pandemic has indeed challenged many of our current assumptions and forced us to rethink our future. However, we should not lose sight of the longer-term driving forces that have been at play – prior to and beyond the pandemic.
3. Allow me to start the discussion with two propositions on the driving forces shaping our future. I will then conclude with a third proposition on what all these mean for small city-states like Singapore.
- First Proposition: US-China relations define the geopolitical landscape of our time. However, the greatest challenge for both is not the other but themselves.
- Second Proposition: The new geography of trade is increasingly defined by connectivity rather than distance or demography.
- Third Proposition: These circumstances present a unique historical opportunity for city-states, like Singapore, to defy the odds – to not only survive but to thrive.
Proposition 1 – The greatest challenge for the US and China is themselves
4. Let me start with the first proposition.
5. Many have framed the US-China relations as a zero-sum contest for global leadership. This is overly simplistic. A consequent fallacy is then to ask which will triumph, and how should we hedge our bets.
6. The strategic rivalry between the US and China will remain a feature of the international system for time to come. Neither will collapse in the foreseeable future, and certainly not from the pressures from the other party.
7. But rivalry and competition do not equate to being enemies.
- Contest they will – from areas of economics to finance.
- Cooperate they can – on issues from North Korea to climate change.
- Conflict they need not end up in.
8. Both countries have achieved historical milestones in the last 100 years.
- The US ascended to global leadership after the first World War and consolidated its position thereafter. No country or empire in history has achieved such dominance and reach in military, economic and geopolitical influence.
- On the other hand, China is fast catching up in terms of its economic prowess, after more than 40 years of economic reforms and integration with the global economy. However, it still lacks the military reach and geopolitical influence of the US.
9. This is key – victory will not be defined by the defeat of the other party, but by who can win over the rest of the world. Victory will depend on the power of their example, rather than the example of their power. And this starts from the domestic front.
10. The greater their success in managing their respective domestic challenges, the greater their confidence to relate to each other as partners. The more they struggle to resolve their domestic challenges, the greater their risks of falling prey to their respective hardliners who desire to paint the other side as the source of all their problems.
11. A straight-line trajectory for China to overtake the US is not a given. China grapples with various challenges:
- How to secure its global supply chains and markets?
- How to grow rich before it grows old?
- How to leverage on the dynamism and discipline of the market without ceding political control?
- How to manage the economic divide between the rural and the urban; between the coastal provinces and the inland provinces?
12. The US pre-eminence cannot be taken for granted as it too has its fair share of challenges:
- How to unite a country divided by party, ideology, race and class?
- How to achieve long-term policy coherence and inspire confidence in its global commitments beyond the vagaries of its political cycles?
- How to continue attracting talent and the best from the world while managing its social tensions?
- How to allow its best to run fast without inequality shackling the whole society?
13. The rest of the world will closely study their development models and exercise of power. Countries will then gravitate towards the partner that aligns best with their own long-term strategic requirements, developmental needs and security interests.
14. While the US and China constitute up to one-third of global GDP, the remaining two-thirds of the world can and must exercise collective agency to uphold and update global integration to avoid a bifurcated or fragmented world.
Proposition 2 – The new geography of trade is defined by connectivity
15. Let me move on to the second proposition – a new geography of trade is emerging. It is defined by connectivity, rather than distance or demography.
16. Economic ties and value chain integration have historically been shaped by distance. Proximity promotes interdependence.
17. However, the reduction of transport costs, the rise of the digital economy and the considerations for supply chain resilience are all reshaping the global connectivity map.
18. The pandemic has brought to the fore multinational companies' considerations of supply chain resilience, market diversity and having trusted partners in deciding where to put their investment and global production layout. Beyond distance, the more salient considerations will increasingly be:
- Connectivity of data and financial flows;
- Harmonisation of rules and standards for intellectual property protection;
- The ability to mobilise capital and aggregate talent; and
- The ability to remain connected to the global trading system, especially in times of crisis.
19. A globally connected economy will always be more attractive than a locally protected economy. Economic resilience will come more from connectivity and diversity, rather than autarky.
Proposition 3 – A unique historical opportunity for city-states
20. Let me now discuss how these two propositions impact small city-states like Singapore.
21. There is a Chinese saying regarding small states – "小国无外交". Small states do not have foreign policy (choices). It is often used to remind small states of their place in life. Rather discouraging.
22. There is a more poignant Chinese saying - 选边站，就靠边站；靠边站，就得选边站。If you choose sides, you become irrelevant. If you are irrelevant, you have no choice but to choose sides. This is perhaps much more encouraging for it suggests that even small states are not without agency.
23. For Singapore, choosing sides or hedging are not our forte or strategy. Being a principled and relevant partner is.
- We stand for an inclusive and connected world and do not adopt a zero-sum mentality.
- We work with like-minded partners, as part of the other two-thirds of the world, to build a rules-based global order for trade and security.
- We believe that if we can deeply understand and appreciate the priorities ofour partners – be they superpowers or regional neighbours – we can value-add to the relationships constructively.
24. We cannot rely on our geographical location, natural resources or population size for our relevance. Instead, we create our relevance through a strategy of connectivity with the world: across physical dimensions of air, land and sea connectivity; and across the non-physical dimensions of data, finance, regulations, technology and talent. This is why beyond conventional FTAs, we are developing a new generation of digital economy agreements for us to harmonise the rules with our major trading partners and with the rest of the world.
25. As a multi-racial society with a deep appreciation of diversity, we can help bridge differences and find common ground. As a society with a set of forward-looking values and ideals of meritocracy and incorruptibility, we seek to attract the most talented and committed to join us to build a nation that can stand the test of time.
26. In a world of uncertainties, we provide a safe harbour with policy consistency and coherence for investors to plant their long-term investments here and for their global businesses to operate out of Singapore as a key node in their global network and value chains. This in turn creates good jobs for our people.
Conclusion
27. Ladies and gentlemen, we began today by asking what lies beyond. Although we are grappling with significant uncertainties, there are reasons for us to be optimistic in Singapore.
28. Beyond the US and China, countries are neither without agency nor responsibility. All of us can pull together to uphold the global trade and security order. All of us can embrace the new dimensions of connectivity that free us from the tyranny of geography and demography. This is why I believe small states like Singapore have the best chance in history to defy the odds – to not only survive but to thrive – with the world as our hinterland and market for resources, talent and ideas.
29. We promise not a large domestic market but a diversified, resilient and global market. We promise not just a highly skilled set of domestic talent, but also a large global talent network. And we promise a principled and relevant partnership that can stand the test of time.
30. Thank you.