Mission Update

PM Lee Hsien Loong's speech at the Boao Forum for Asia Opening Plenary on 10 April 2018. He spoke on China's growing role in the international system, and the importance of its efforts to uphold openness and multilateralism. 

Your Excellency President Xi Jinping and Madam Peng Liyuan, fellow leaders, ladies and gentlemen,

The theme of this year’s Boao Forum, "An Open and Innovative Asia for a World of Greater Prosperity", is appropriate and timely. I thank President Xi for his keynote address and my fellow leaders for their insights and perspectives from each of their different positions on the shared issues that we all face.

Asia has outperformed the global economy because of openness. Individual economies have liberalised and opened up. Notably, China with its 改革开放 – liberalisation and opening up – over 40 years. Others too, like India and the ASEAN countries in Southeast Asia, have pursued similar economic policies, and thrived. They have benefitted from an open, rules-based international order and a multilateral trading system. This has fostered economic cooperation within the region, and deepened interdependence between the Asian countries, the US, Europe and the rest of the world.

Asia’s economic prospects are good. This year, the World Bank forecasts that East Asia and the Pacific will grow by 6.2 per cent. It is double the expected global growth of 3.1 per cent. But to sustain Asia’s economic dynamism, countries have to remain open and connected to one another, and the multilateral WTO system must hold up as the basis for global trade and commerce. This cannot be taken for granted. To keep this international framework in good order, countries will have to adjust with the times. They must bring up to date their policies and international institutions to account for changes in the strategic and economic balance.

Perhaps the most far-reaching change thus far has been the rise of China. Since China joined the WTO in 2001, its weight in the global economy and its share of world trade have grown enormously. This has greatly benefitted China itself, and many other countries in the world, including Singapore. China’s role in the international economy will grow larger. This has shifted the overall strategic balance. It has also raised expectations from other countries of what China should do – to liberalise its markets further, and contribute to the multilateral trading system.

Indeed, China itself recognises that it has been a major beneficiary of globalisation, and it will lose out if the existing multilateral, rules-based order falters. In Davos last year, President Xi Jinping laid out clearly China’s approach and policies, upholding openness and multilateralism. The Asian Infrastructure Investment Bank (AIIB) and the Belt and Road (B&R) Initiative are two major efforts by China to contribute to the regional structure and regional prosperity. They aim to strengthen trade and investment ties, and enhance integration and interdependence. These are constructive, effective strategies for a growing China to integrate with the regional economy, and engage its neighbours through win-win cooperation. This is why Singapore was a founding member of the AIIB and a strong and early supporter of B&R.

Since the Lianghui, the recent two meetings in Beijing, Chinese leaders and officials have declared China’s determination to liberalise further. Today, I was very glad to hear President Xi reaffirm this, and announce further steps in financial sector reforms, in opening up foreign investment rules, in protecting intellectual property and increasing automobile imports. We look forward to seeing these strategies elaborated, implemented, and bearing fruit.

This is the broader context of the recent trade frictions between the US and China. The US has announced a series of unilateral tariffs on imports, many targeted at China. China has responded correspondingly, as it has to do. China’s response has been careful and calibrated. Nevertheless, a serious dispute is now joined. Everyone still hopes that before these tariffs are implemented, the two countries will be able to work out an accommodation and head off further escalation.

Singapore does not believe that imposing unilateral tariffs is the correct solution. Unilateral measures are not compliant with WTO rules. Trade disputes should be resolved within the WTO framework. More fundamentally, as economists point out, the focus on the bilateral trade imbalance between the US and China is misplaced. What matters to a country is not its bilateral trade balance with a specific trading partner, but its overall trade balance with the rest of the world. Furthermore, the cause of a trade deficit is an imbalance in the domestic economy. In particular, a trade deficit happens when a country consumes more than it produces.

Nevertheless, we have to recognise that there is broad political support in the US for these measures. This is a change in the mood. What is it due to? Trade arrangements and concessions made in the past when China was only 5 per cent of the world’s GDP are less readily accepted today, when China makes up 15 per cent of the world’s GDP and is expected to grow this share even further. US companies that previously advocated for China when it joined the WTO in 2001, now feel disadvantaged. They perceive that the playing field is not level for all companies, in terms of market access or investment restrictions, especially in technology sectors. These pressures are not new, and have been building for some time.

A trade war between China and the US is still far from inevitable. But if one does happen, it will undermine the multilateral trading system which has underpinned global prosperity. Countries big and small will be affected.

It is reassuring that most Asia Pacific countries remain committed to multilateral trade and economic cooperation, for example through the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP) negotiations. These trade initiatives are important, but they will not compensate for the damage from a trade war, which will extend way beyond the economic loss that they cause.

China and the US have the most important bilateral relationship in the world. A trade war must damage these bilateral ties in many areas. Surely it will make it much harder for the two countries to cooperate on climate change, non-proliferation, regional security, and denuclearisation of the Korean Peninsula. None of these issues can be solved without the full participation of both countries. If the disputes escalate and destabilise US-China relations, the consequences for the world could be catastrophic.

There will always be competition between the major powers. But it makes all the difference whether competition takes place within a framework of interdependence, and generally accepted rules of the game. Because what is ultimately at stake is war and peace, the security and stability of the world.

In international affairs, one of China’s strengths has always been its ability to take a strategic long-term view. It is in China’s fundamental interests to contribute more to strengthening multilateralism, in keeping with its larger weight in the world. It is vital that China does so now, at this testing moment in international relations. I am confident that China will handle this challenge well, safeguard its own interests, and keep the global system open and inclusive. This will create an international environment that will enables China to attain its two centenary goals, and other countries to grow and prosper in a stable and peaceful world.

Thank you.

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(Chinese translation provided by zaobao.com.sg)

今年的博鳌论坛以“开放创新的亚洲，繁荣发展的世界”为主题，十分切合时宜。我感谢习近平主席的主旨发言以及其他国家领导人从他们各自不同的立场，对我们共同面对的问题，分享他们的见解和观点。

亚洲的经济增长能够优于全球表现，关键在于对外开放。各个经济体采取了自由开放的贸易政策。例如，中国改革开放已经推进40年，其他国家如印度以及东南亚的亚细安成员国也采取了类似的经济政策。各国从一个开放、基于规则的国际秩序和多边贸易体系中受益，这促进了本区域国家之间的经济合作，也加深了亚洲国家与美国、欧洲和世界其他国家之间的经济依存关系。

亚洲的经济前景良好。世界银行预测东亚和太平洋地区今年可取得6.2%的经济增长，比全球经济3.1%的增长预测高一倍。但要维持经济活力，亚洲各国就必须继续保持开放和互联互通，并以世界贸易组织多边贸易体系作为国际贸易和商业活动的基础。我们不能将这一切视为理所当然。要确保这一国际架构能够有效运行，世界各国必须顺应时代发展作出调整，更新各自的政策和国际机制，以配合战略和经济平衡格局的改变。

或许至今为止最重大的改变，就是中国的崛起。中国自2001年加入世贸组织之后，在全球经济所占的比重和在国际贸易所占的份额都大幅度增加。中国从中获益良多，许多其他国家包括新加坡在内亦从中受惠。中国在国际经济上扮演的角色将更为重要，这促使国际整体的战略平衡格局出现了调整。其他国家对中国的期望也因此提高，他们希望中国进一步开放市场，为多边贸易体系作出贡献。

中国本身也认同自己是全球化的主要受益者，而倘若现有的多边贸易体系和以规则为基础的秩序受挫，中国也会有所损失。中国国家主席习近平去年在达沃斯举行的世界经济论坛上，已清楚阐明中国的相关方针和政策，坚持支持对外开放并维护多边体系。亚洲基础设施投资银行和“一带一路”倡议是中国为区域架构和繁荣作出贡献的主要计划。这些计划旨在加强各国之间的贸易和投资关系，以及推进本区域一体化和各国的相互依存关系。这些都是具建设性和有效的战略项目，让综合国力不断加强的中国，同本区域的经济接轨，并通过双赢合作同邻国建立联系。这也是为什么新加坡会成为亚投行的创始成员国之一，并且一开始就大力支持“一带一路”倡议。

中国在“两会”后，中国领导人和官员向世界传递了要进一步对外开放的坚定决心。我很高兴习主席今天再一次阐明中国对外开放的决心，并宣布在金融改革、放宽外国投资条例、保护知识产权和加强汽车入口方面的进一步开放举措。我们期待这些战略的详细内容，成功落实并取得丰硕成果。

这是美国和中国最近出现贸易摩擦的背景。美国单方面对进口商品征收一系列关税，它们当中有许多是针对中国的。中国不得不作出相应回应。中国的回应是谨慎而经过深思熟虑的，但是中美之间还是出现了严重的争端。大家都希望在关税实施前，两国能够彼此作出妥协，避免争端进一步升级。

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