Singapore will not take sides in geopolitical conflicts, instead taking positions supporting the rule of law, the country’s education minister, Chan Chun Sing, said in his keynote address at Morgan Stanley’s Asia-Pacific Summit in Singapore on Wednesday.
He said the world should remain interdependent despite the pressures of disintegration, as any kind of rupture would render individual countries “sub-optimal” and suffer economically.
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“With interdependence comes risk, but a fragmented world with less interdependence, where people and big countries believe they can improve their security and indirectly worsen another country’s insecurities, that can’t be a win-win situation,” said Chan.
“Global companies have a voice and need to be heard that they prefer an integrated world and not a fragmented world,” said Singapore’s Education Minister Chan Chun Sing (pictured here in 2019).
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“It is important to remember that a more interdependent world is a safer world. But today, due to pressures both domestically and globally, there is a temptation to believe that if the world fragments, two different blocs, each of the different blocs would be safer.”
Chan said that if fragmentation persists, countries and companies will not function at their best “instead of … enjoying the last 50 years of rapid growth based on a globally integrated system.”
Now the rules-based international security system and the trade order have “come under pressure” again and cannot “be taken for granted,” he added, using the example of the Cold War.
He cited Russia’s war in Ukraine and the World Trade Organization dispute settlement crisis like some of the cracks in the system.
Speaking directly to business leaders and investors at the investment conference, Chan called for global integration.
“Global companies have a voice and need to make their voice heard that they prefer an integrated world, not a fragmented world,” Chan said.
He said Singapore would also do its part by bridging and “interoperating” fragmented blocs.
“We believe there will be a premium for connectivity, stability, progressiveness, cohesion and trust,” added Chan.
Fragmentation is beginning to tear at the stability of the global economy, Morgan Stanley Investment Management said in a separate note on Wednesday.
Deglobalization and supply chain disruption, for example, are fueling inflation, said Andrew Harmstone, the company’s senior portfolio manager.
“World trade as a percentage of GDP has historically increased very rapidly, which has contributed to the very low inflation rate. But the shift trend will tend to reduce trading,” he said.
According to the Hinrich Foundationalthough terms like “friend-shoring” have entered the lexicon of US trade policy and that of other countries like Japan, little is known about what they mean.
“When governments try to intervene in a supply chain, they need to make sure they monitor the risks better than companies. But it is unclear what market failures the friend-shoring policy will fix without further fragmenting the world trading system.” said Halit Harput, Author of the Hinrich Report.
Chan said Singapore will continue to take no sides, but will take consistent positions.
“In recent months, when Russia invaded Ukraine, we objected. People ask is this a pro-US move? Or is it an anti-Russia or anti-China move? Neither nor. When the US invaded Grenada, we objected. When the USSR invaded Afghanistan, we objected,” Chan said.
“We believe that the rule of law, especially at international level, is the best guarantee for the survival of a small country.”
“And that’s not just true for Singapore, but I’m going to suggest that it’s true for every country in ASEAN as well.”
And while positive words were exchanged between US President Joe Biden and Chinese President Xi Jinping on the sidelines of Monday’s Group of 20 meeting, Chan said it is important to monitor the actions that follow.