Asean, China must deepen ties, manage disputes rationally: DPM Heng

EVEN as South-east Asia's relationship with China has come a long way since formal dialogue relations began three decades ago, efforts should be taken to strengthen the foundational building blocks while creating new building blocks of cooperation, said Deputy Prime Minister Heng Swee Keat at the FutureChina Global Forum on Monday.

This is even as the parties manage any differences in a constructive manner and remain open to all partners, said Mr Heng, who is also Coordinating Minister for Economic Policies.

"Even as we deepen the Asean-China economic relationship, we must also manage the friction and disputes well," he said.

Mr Heng cited specifically competing claims in the South China Sea and concerns over environmental degradation in the Mekong region.

"The key is to manage these disputes in a rational manner, in accordance with universally recognised principles of international law... and with guard rails to ensure that tensions do not escalate out of control," he said.

Separately, US presence in the region will continue to be an important stabiliser, said Mr Heng, pointing out that the US provided the foundations for global trade to flourish and that American companies have invested extensively in the region, bringing with them not just capital but ideas and technology.

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"This has benefited the region as a whole, including South-east Asia and China," said Mr Heng.

While he noted that the region welcomes the US's renewed focus on Asia under the Biden administration, it is not just the US or China that have significant influence. He cited partners including Japan, India, Australia, and various European countries as too having important roles to play.

"So even as we create new building blocks between Asean and China, we must bear in mind that an open, transparent, inclusive and rules-based region ultimately benefits all countries - Asean, China, US and all major trading partners," he said.

"But the biggest challenge that the region faces is the strategic competition between US and China."

While tensions are unlikely to abate for the foreseeable future, the key to stability for South-east Asia and the world, is for the two major powers to focus on expanding common ground while preventing tensions from boiling over.

"For Asean, we do not expect to change the course of the strategic competition, but we must do all that we can to keep the region open and inclusive," said Mr Heng.

"Our region must remain firmly anchored on Asean's own interest, and continue to build a regional architecture that is open, transparent, inclusive and rules-based."

As for Asean and China, areas where the foundation of existing partnerships can be fortified include the Asean-China FTA (free trade agreement), said Mr Heng.

"Let us work toward upgrading this agreement to reduce non-tariff measures and address new priorities, especially for the digital economy.

"As we prepare to resume cross-border travel, we should rebuild our aviation links and further liberalise the Asean-China Air Transport Agreement to boost our region's connectivity," he said.

Two new building blocks he highlighted include digital collaboration and sustainable development.

In the area of digital collaboration, one way to strengthen collaboration is to pilot more city-to-city projects, similar to the Smart City Initiative between Singapore and Shenzhen, he said.

At the country level, digital economy agreements can contribute towards the development of common global frameworks and standards which ensure that cross border transactions and digital exchanges, including e-payments and data flows, are safe, secure and efficient.

On the sustainable development front, a way forward is by catalysing green recovery, from investing in buildings that are more energy-efficient, to exploring cleaner energy sources such as solar and wind.

"Given the large infrastructure funding needs, we will need to improve the flow of cross-border capital and crowd in private funding," he said.

A "Green BRI", similar to China's Belt and Road Initiative (BRI) will be a major step in catalysing green infrastructure, said Mr Heng, adding that Singapore is contributing to the green recovery effort through Infrastructure Asia with up to US$15 billion in green bonds for public infrastructure projects.

Carbon sequestration - the long-term capture of carbon dioxide from the atmosphere - is also key. South-east Asia has more than one-third of the world's mangroves, and up to 120 million hectares of land for reforestation, giving the region significant potential to contribute to nature-based solutions for carbon capture.

"To realise this potential, we need to catalyse investments. One important building block is to set common standards, improve traceability, and create vibrant exchanges for the trading of carbon credits," he said.

Singapore is launching one such financial exchange - Climate Impact X - which is jointly set up by the Singapore Exchange, DBS, Standard Chartered and Temasek, by the end of this year.