US and China managing their ties well will be hugely beneficial to the world: President Tharman
The remarks come at a time when Washington and Beijing are escalating their trade war again
[SINGAPORE] Competition between the United States and China should not be seen as a threat to be eliminated but an opportunity to be managed, said Singapore’s President Tharman Shanmugaratnam on Oct 15.
If they are well-handled, interactions between the two superpowers can lead to prosperity for both nations and help the world to solve common problems, he said during a lecture at the International Monetary Fund (IMF) headquarters in Washington.
“The stakes are high. If we manage this well, the US-China edge will be a source of prosperity for both nations – and the world’s greatest engine of innovation,” said Mr Tharman.
“If we fail, and progressively decouple the two systems, we face growing danger, and no winners,” he warned, in reference to the different economic systems of the US and China, the former a market-driven system and the latter a state-guided economy.
“The US and China will have to manage their relationship differently, for that will be central to how we avoid a multipolar world becoming a more polarised and dangerous world,” he added, noting that the fault line between the countries is widening, with a growing intersection between national security and economics.
Mr Tharman’s remarks come at a time when there is an escalating tit-for-tat trade war between Beijing and Washington.
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Using an ecological metaphor, he said the interface between the US and China has been, and can be, greatly productive, similar to how hybrids flourish and new life forms emerge where two different ecosystems meet.
He noted that while the US may be able to delay China’s catch-up in key technologies like high-end chips, it will be difficult for Washington to prevent Beijing from advancing.
The question is whether China maintains interdependence with the US, Europe and other major technology players as it advances, or if it does so through a strategy of self-reliance.
But Mr Tharman cautioned that both outcomes come with risks, as interdependence will have to be actively managed by both sides to prevent the weaponisation of key technologies or materials, while a decoupling will result in a more profoundly dangerous world.
“There is an alternative perspective that we can borrow from the world of ecology on how the US and China might interact. One that accepts that they will compete vigorously, yet interact dynamically in ways that can be hugely beneficial for both nations and the world,” he said.
This is the second time that President Tharman has delivered a lecture as part of a yearly series by the Per Jacobsson Foundation that is held on the sidelines of the IMF and World Bank’s annual meetings.
It is one of several engagements that has been lined up during his five-day working visit to the US from Oct 13 to Oct 17.
In his lecture, Mr Tharman called for new coalitions and renewed multilateralism as the world moves away from having a single hegemonic power, noting that the US has made a steady retreat from its role as a defender of open markets, and from international cooperation on issues such as climate change and global health.
“Without international cooperation and collective action, it will be impossible for any country, large or small, to secure its own interests and ensure the economic security that its people desire,” he added.
To renew and sustain this cooperative international order, the world needs to do better to create good jobs, said the President.
He highlighted an unprecedented job crisis affecting millions of young people across the world, adding that job creation cannot be left to the market and instead requires social policy on an industrial scale.
He noted that a vast wave of Gen Z youth in advanced and developing economies faces a generational challenge in securing jobs and getting on a ladder of improvement.
“In the developing world, it is a challenge of unprecedented magnitude – 1.2 billion young people are entering working age over the next decade, and on current projections, we will fall short of providing jobs for 800 million of them,” he said.
Artificial intelligence (AI) has also led to a decline in hiring for some entry-level jobs, Mr Tharman noted.
“If AI accelerates this erosion, we face the risk of a generation already scarred by Covid-19 during their schooling years now being doubly scarred by missed opportunities as they enter the job market,” he cautioned.
To tackle this, he called for bolder investments in technical and vocational education to correct an “over-academisation” of post-school education, and for a more proactive and muscular approach to helping those displaced by technology and competition.
Mr Tharman also called for reforms to the World Trade Organisation’s (WTO) consensus decision-making process, which he said has been a recipe for paralysis.
He noted that a number of countries, including Singapore and China, have proposed new ways for the trade organisation’s members to find consensus, and these proposals should all be considered seriously.
Other changes that he suggested include an updated framework on countries’ use of export restrictions; reforms to avoid a global subsidy race; and objective needs-based criteria for access to the WTO’s system of special and differential treatment, which gives benefits, such as setting higher tariffs, to developing countries.
Mr Tharman warned that a long and messy interregnum in global leadership during the transition from a unipolar world to a multipolar one risks a slide into disorder.
“It’s not difficult to see how (this) could occur,” he said, citing the side-stepping of rules and norms, the inadequacy of climate action, and a “doom loop” of domestic anxieties and fraying social fabrics feeding into a distrust of institutions and global cooperation, which in turn weakens national economies.
“We have to breathe new life into multilateralism itself so that it can help solve the world’s largest problems,” he said.
He called for what he termed “pathfinder multilateralism”, with WTO-compliant agreements involving coalitions of countries that create momentum for fair and open trade.
One example he cited is the start of conversations between the European Union and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, of which Singapore is a member, about potentially aligning standards and expanding cooperation.
Mr Tharman also spoke about AI safety as a concern for global governance.
He said guardrails are needed to contain the worst risks associated with the technology, such as AI-powered scams, runaway misinformation and AI-designed bioweapons.
“States on their own will not be able to contain these risks... We have to set up coalitions, guided by science, to promote the responsible development and use of AI,” he added.
He suggested the creation of an independent group of scientists in the mould of the United Nation’s Intergovernmental Panel on Climate Change.
Ending on a note of optimism, Mr Tharman said history has shown that new forms of cooperation and new bases for progress can be forged in times of crisis and transition.
He added: “This is no time for timidity.” THE STRAITS TIMES
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