SINGAPORE: Even as US-China frictions threaten global trade, Asia should not cave in and start on a path of isolationism, Deputy Prime Minister Tharman Shanmugaratnam said on Friday (Apr 13).
"We know what’s happening between the US and China; we have a very public game of chicken that is taking place," Mr Tharman said.
"(It is) important not to take this as a signal that we should start looking domestically or at intra-strategies, or start turning inward. The opportunities and the critical necessity of opening up remain in Asia."
Mr Tharman was speaking at the HT-MintAsia Leadership Summit, where politicians, academics and leaders in art, science and technology gathered to discuss the road ahead for Asia.
This comes on the back of tariffs imposed by the US on imports of steel and aluminium, while China has struck back with tariffs on US goods including pork, wine, fruit and nuts.
However, Chinese President Xi Jinping has eased worries over a simmering US trade conflict by promising new measures to continue opening up his country's massive economy.
AdvertisementAdvertisement"The risks are greater than they have been in a long while. I think the risks of all-out trade war are limited, but the risks of an impairment in global trade are now significant," Mr Tharman said.
"I think it’s a particularly important time for us to show that ... we are still on the path of liberalisation, opening up and lifting up our people."
To that end, Mr Tharman said there is still "significant" scope for Asia to increase exports and imports to ensure a dynamic economy.
"We do it not just because we are searching for new markets, we do it because the source of economic dynamism has always been competition and learning," he said. "And it is through trade, through investment across borders, that we learn the fastest."
Mr Tharman pointed out that in Asia, the most export-oriented countries are the ones that have seen the most rapid growth in productivity, which in turns leads to a better standard of living.
"So, the real merit of opening up is not about markets ... The real merit is about learning," he added.
"It’s about buyer specifications that are more sophisticated than something you were previously doing. It’s about a foreign investor that might have a technology that is different from what we already have. It’s about the learning that comes from interaction.
"That has been very obviously the story of a small economy like Singapore, but it is also the story of the Koreas and Taiwans of the world, or the coastal provinces in China."
OPENING UP CREATES JOBS
Asia should also not stop opening up because the issue of jobs remains the "most important priority in many parts of Asia", Mr Tharman said.
He cited the example of India, which needs 10 to 12 million jobs a year, and urged the country to move away from protecting firms in the domestic market to develop "competitive strengths" for the international market.
"India has embarked on those new strategies and there’s been impressive progress in infrastructure in particular," he said, noting that Indian vehicle manufacturers like Tata, Mahindra and Hero are capable of competing internationally.
"But I have to say quite frankly that the pace and direction of travel is not enough. It requires a more decisive change."
Mr Tharman added that based on current strategies, manufacturing is "not going to achieve the ambitions that India has set out for itself".
"You need the spur of competition in order to develop competitive strengths," he stressed.
"Make in India has to be make in India for the world and India. It has to be an external orientation because of those supply side benefits of constant learning that come with making for the world and having the world make with you."
This external orientation includes improving air connectivity, as Mr Tharman also urged India to expand its air links with East Asia.
"(Air connectivity) is how a lot of growth is spurred," he said. "Because it’s not just about the number of people you carry, it’s the fact that they are also coming with business, with investments."
LINKING UP SMART CITIES
And because of what is happening in India and ASEAN, Mr Tharman said there are opportunities in the area of digital innovation and smart cities.
"We have within ASEAN a strategy now of developing more smart cities and linking them up in a network," he said. "This is one of the initiatives of Singapore as a chair of ASEAN this year."
Noting that India has embarked on its own strategy of developing smart cities, Mr Tharman praised the tie-up between Singapore's NETS and India's National Payments Corporation to allow cross-border use of both payment solutions in India and Singapore.
"But there is a long way to go to link our economies and link up our smart cities digitally," he said.
Rounding up the main points in his speech, Mr Tharman said "we will all gain from this". "This will be how, as (Indian) Prime Minister (Narendra) Modi says, we use trade, investments, connectivity to lift up all our peoples."
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