Live On-Air
Bloomberg: You’ve had conversations with your counterpart in the US. Is there a shift in US’ commitment towards Asia? Do you get a sense of that?
Min: Well, I think the US is undergoing a period of anxiety. In fact the first sign of a society that is probably not keeping up with the digital revolution is when middle-class wages are squeezed, and middle-class jobs are being eroded. This is a clear warning sign. The problem, however, is in the reaction. And I want to make this point – don’t blame trade. The real game in town is the digital revolution, and the fact that new jobs are being created, and you need new skills, and you need to train people for that. So the worst thing that could happen now is a trade war.
I’ll give you another recipe which is a dead-end – which is – don’t onshore obsolete jobs. You need to be looking where the new jobs are being created, where the new ways of creating value and distributing opportunities, and preparing our people for it. In Singapore we focus on education, education, SkillsFuture, putting money in peoples’ accounts so they can go for relevant courses, upgrade skills, enhance productivity. It’s hard work, it’s not glamorous work, it’s not a quick fix, but that’s where the real solution is. So I’m most worried about a trade war.
Bloomberg: Geopolitics have taken over the headlines. And looking at the South China Sea for instance, we’ve seen how Vietnam’s pulling back in terms of drilling and presumably because of the pressure from China. Also the Philippines has pretty much agreed to join drilling with China as well. Is there a sense that countries are pulling back from challenging China?
Min: Well, I would take a step back. The key strategic trend is that we are moving to a multipolar world. And it’s not just the United States, it’s not just China, but it’s India, it’s Europe, South America and Africa. First point. Second point, is trade. The South China Sea is so important because US$5 trillion worth of trade flows through there. And frankly I think the risk of the war is very low. But that’s not what I am worried about. Just the hint of tension raises risk premiums, raises insurance premiums, affects trade. We need to have peace and stability so that trade can continue. The third point is that, never before in human history have China and the US – two superpowers – been so intertwined. China is the US’ largest trading partner. China also is the largest single holder of US Treasury Bonds. Never before in history have two powers been so intertwined. This is completely different from the Iron Curtain and the very limited interaction between the USSR and America 50 years ago. So we are in a different world, we need cool heads to prevail, we need to stop blaming trade, we need to stop trying to onshore obsolete jobs, we need to work together, we need to create a zone of interdependence, mutual investment, and then reap the fruits of this technological and digital revolution.
Bloomberg: Singapore was once seen as the agitator in the South China Sea.
Min: No, no. We are not agitators in the South China Sea. Not at all. But…
[Transmission was lost at this point. Minister continued an on-the-record conversation with Bloomberg following the cut in transmission. The transcript of the foreign policy-related portions are below.]
Min: The key things which I wanted to say there on foreign policy was don’t blame trade; the real game in town is the technological revolution; and the other thing was just don’t aim to onshore obsolete jobs. There are no quick fixes. You need to focus. There are new jobs being created. The key challenge for governments is to ensure that people are ready with the right skills, relevant skills, capabilities, to take on these new jobs. It’s not a quick fix, it’s not glamorous, it’s hard work, but it needs to be done.
The other point I made was about interdependence. If you compare, say, 50 years ago during the Cold War, the USSR and America had far less interaction, were not intertwined economically or mutually dependent. It’s very different today. China is the US’ largest trading partner; China also the single largest holder of US Treasury bonds, so they are actually mutually intertwined.
That’s why we have got to change the relationship to one of interdependence where both sides recognise that they are interdependent. We need a stable, peaceful world, so that investments can flow, ideas can flow, new products, new services can be generated. And assuming we can get a stable polity in Northeast Asia and across the Pacific, then Southeast Asia, with 628 million people, with a combined GDP of US$2.5 trillion right now– but set to double or treble that in the next two decades – will take off.
That’s why we need free trade, we need freedom of navigation and overflight. I also said that I didn’t think the probability of a war on South China Sea is very high.
But more important. Even if there is a risk or hint of instability or tension, that alone already would raise risk premiums. It would already erode business confidence and business profits. So that’s why it’s so important.
To make the point that we are not agitators, trade is three and a half times our GDP. So for us, when we talk about the importance of free trade, of open sea lanes, of freedom of navigation and overflight, it is not a debating point, it is not a negotiating tactic. This is lifeblood for us. But the same should really apply to all superpowers and all the people bordering the sea. That’s basically the point – the need for free trade, the need for cool heads to prevail, the need to adopt the paradigm of interdependence. Don’t blame trade, and don’t just try to onshore obsolete jobs. Create new jobs.
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