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Trade conflict would make Asian countries' relationships with US, China 'very difficult': PM Lee

SHANGHAI — The souring relationship between the United States and China, fueled by escalating trade disputes, would further complicate regional dynamics as Asian countries attempt to maintain their relationships with the two superpowers, Prime Minister Lee Hsien Loong has said.

SHANGHAI — The souring relationship between the United States and China, fueled by escalating trade disputes, would further complicate regional dynamics as Asian countries attempt to maintain their relationships with the two superpowers, Prime Minister Lee Hsien Loong has said.

In a speech earlier this week, he had warned of "catastrophic" global consequences if strained US-China ties deteriorated into a trade war. Asked to elaborate on his concerns as he wrapped up a five-day visit to China on Thursday (April 12), Mr Lee told the Singapore media: "(It) would make it very difficult for all the countries in Asia who are trying very hard to become friends with both, or stay friends with both ... I think going down this route is clearly the wrong thing to do."

Both the US and China have been threatening to impose more tariffs on each other's exports in the past week, rattling global markets and sparking fears of a full-blown trade war.

The US' trade deficit with China climbed to its highest level on record last year, prompting the Trump administration to threaten a sweeping 25 per cent tariff on over 1,300 Chinese imports, like flat-screen televisions, medical devices, aircraft parts and batteries. China has hit back with proposed tariffs on US$50 billion worth of American soybeans, cars, chemicals and other goods.

Mr Lee said he could not quantify the potential impact on trade-dependent Singapore, but noted that the Republic would have to be psychologically prepared for a more uncertain time.

Asked if Singapore could play a role in mediating the simmering US-China dispute, Mr Lee stressed that Beijing and Washington already have multiple channels to discuss their mutual concerns, and that the Republic "cannot be a bridge".

He added: "(The US and China) have many opportunities to talk to one another, and they do not lack for contact. What they need to do is to be able to establish trust and be able to have the direct candid discussion of what their concerns are, what their problems are, as each side perceives them, and what can be done about it."

While Singapore can express its own views in good faith and in a helpful manner, it has "no role" in the ongoing standoff, Mr Lee stressed.

Earlier this week, Mr Lee met Chinese Premier Li Keqiang and Vice President Wang Qishan in Beijing. He held talks with Chinese President Xi Jinping on Tuesday, after speaking at the annual Bo'ao Forum for Asia held in southern Hainan province.

Mr Lee arrived in Shanghai, his last stop, on Tuesday evening, and met the Chinese financial hub's party chief Li Qiang the next day. Prior to his departure from China on Thursday, Mr Lee spoke at at the DBS Asian Insights Conference in Shanghai where he fielded several wide-ranging questions during a dialogue session.

Asked how he would compare Sino-Singapore ties under his leadership with that during founding Prime Minister's Lee Kuan Yew's tenure, Mr Lee said the times have changed.

He added: "In the previous generation, China was not as open and has not built relations from the rest of the world. Singapore was probably a few steps ahead at that time… I see now that China has opened up and has established links with many countries and understands them deeply.

"Singapore is a small country. We have our position, advantages and opinions… We can articulate our stand and share our analysis of the international situations, possible solutions, but we cannot direct these situations."

Asked if Singapore still serves as a "bridge" between countries in the East and West, the Prime Minister said: "Singapore now plays a different role than in the past. We are a small country and we know where we stand.

"We can't say that we can play a crucial role but we will try to in our limited capacity."

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