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US-China trade war may last a long while, global economies will have to adjust: Chan Chun Sing

SINGAPORE — The ongoing trade war between the United States and China goes beyond American domestic politics or the personalities of their leaders, and points to fundamental issues which suggest that it will last for a long while, Trade and Industry Minister Chan Chun Sing said.

US-China trade war may last a long while, global economies will have to adjust: Chan Chun Sing

Trade and Industry Minister Chan Chun Sing speaking at the American Chamber of Commerce's Balestier Series.

SINGAPORE — The ongoing trade war between the United States and China goes beyond American domestic politics or the personalities of their leaders, and points to fundamental issues which suggest that it will last for a long while, Trade and Industry Minister Chan Chun Sing said.

Speaking on Tuesday (Aug 14) at the American Chamber of Commerce's Balestier Series, where senior business leaders and government officials are invited to discuss economic and commercial issues, Mr Chan asked the audience if they thought the trade war will be over after the US mid-term elections in November, or after a change in political leaders, or that it will last a while given the fundamental shifts.

The majority picked the last option. About 250 members from the American and international business community attended the talk.

Mr Chan said: "You all believe that this is in for the long haul, and I don't disagree with you. We all will hope for the best, but I think there is something more fundamental going on."

Economies around the world will have to adjust, just as the US and China adjusts to each other, he added.

Mr Chan noted that while some have said that this came down to the views of the Democrats versus Republicans, during the 2016 presidential election, candidates from both sides felt the need to repudiate the Trans-Pacific Partnership given the domestic sentiments among the Americans then. These included a backlash against free trade and globalisation, among other anti-establishment views.

Noting that globalisation does not always benefit everyone equally, he said: "Some will benefit more, some less, and there might even be some who will lose out. The question for every country who participate in the globalisation process is, do you have the domestic capacity and will to help the constituents within the country to make those necessary adjustments?"

Such adjustments include redeploying resources from sectors that benefited from globalisation to those that did not, he added.

On American president Donald Trump's Indo-Pacific strategy, Mr Chan said that the US has presence in North-east and South-west Asia. "If you look at the global geopolitical chessboard, the way to connect (both regions) is South-east Asia. That's the lynchpin, it has been so for a long time… So South-east Asia (has been and) will be of critical importance to the US in the past and in the coming decades."

As part of the Indo-Pacific strategy, aimed at casting itself as a trustworthy partner in the region, the US had announced US$113 million (S$154 billion) worth of investment in new technology, energy and infrastructure initiatives in Asia, as well as US$300 million in funding for security co-operation within the Indo-Pacific region two weeks ago.

What is more important though, is the ability to consistently execute such strategies, Mr Chan said. Consistency in vision and purpose in support of multi-lateral trade deals is "a great competitive advantage for all countries, big or small".

Asked about Singapore's consistent message on the need for free trade, Mr Chan said: "For Singapore, we have to be consistent because we have no other choices… We are just entirely focused on being part of the global trading system. Our survival depends on us transcending our geographical size and location."

While Singapore has remained connected to other economies through air, land and sea, he noted that going forward, the country also has to stay connected in the areas of finance, data, talent and technology.

Pointing out that politics follow economics, he urged the American business leaders at the event to continue with investments in the region.

"Your choice of where you put your investment, your choice of where you make those strategic moves for your company, will cumulatively build up a picture of what the US stands for in this region… The choice you will make individually will collectively inform Washington where their priorities will be."

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