Singapore’s prime minister-in-waiting called for the global economy to be “prepared for the unpredictable,” amid strained relations between the US and China over matters of trade and geopolitics.
“Intense, extreme competition will be the defining feature in the bilateral relationship,” Deputy Prime Minister Lawrence Wong said, referring to ties between the world’s two largest economies. He was speaking at a conference Reinventing Destiny in Singapore on Monday.
Changing relations between the US and China have implications for the global economy at a time when demand for goods is witnessing a sharp downturn. Trade-reliant Singapore faces the prospect of slower expansion amid a faltering recovery in China and expectations of cooling growth in the US.
“We already see the bifurcation in high-end semiconductor chips,” Wong said. “And I’m sure that bifurcation will expand to new areas particularly contested areas of technology like quantum computing, or artificial intelligence.”
Countries in the region are faced with the difficult choice of siding with one nation or the other amid geopolitical disputes including the issue on Taiwan. There’s “no equilibrium” in US-China relations right now, Wong said, adding that Singapore wants to maintain close ties with both.
“There will be a price to pay for a global economy that is organized not by economic efficiency but by geopolitics and security considerations and imperatives,” he said. It’s worrying, Wong said, that the external environment is increasingly becoming less hospitable for small states like Singapore.
Wong, who is expected to succeed Prime Minister Lee Hsien Loong around election due by 2025, warned of possible “accidents and miscalculations” as the two economic powers face-off on geopolitical hotspots in the region, including in the Taiwan Straits and South China Sea primacy.
Those tensions mean added risks for growth in the region. The city-state’s trade and industry ministry last week narrowed its projection for gross domestic product expansion this year to a range of 0.5%-1.5% from 0.5%-2.5% previously.
Singapore is still confident of avoiding a recession, amid strength in aviation- and tourism-related businesses and expectations of expansion in consumer-facing sectors such as retail trade and food and beverage services, according to the trade ministry.
--With assistance from Aradhana Aravindan, Xiao Zibang and Low De Wei.
