May 23, 2022
SINGAPORE – China’s development is positive for the region, but countries in the Asia-Pacific also want to maintain their very important ties with other economies like Japan as well as the United States and Europe, Prime Minister Lee Hsien Loong said.
And countries like Singapore want to nurture these links with Japan, which is the next biggest economy in Asia by far, and maintain a balance so that they have resilience and are not overly dependent on any single party, he added.
“Overall, we can prosper together, benefit from our interdependence, and have the incentive to keep the region peaceful, stable and secure.”
PM Lee was speaking in an interview with Japanese media group Nikkei on Friday (May 20), ahead of its International Conference on the Future of Asia, which he will be attending this week in Tokyo.
During the interview with Nikkei editor-in-chief Tetsuya Iguchi, published on Monday (May 23), PM Lee was asked about the tilt in the regional economic and military balance towards China over the past 10 years, as well as the role of the US and Japan in achieving “better balance” in the region.
In response, he acknowledged that as China’s economy has grown and developed, its influence has grown and its impact on the regional economy has become considerable.
“They are the biggest trading partner of nearly every country in Asia, including Japan and Singapore. It is natural, and it is something which the regional countries generally welcome, because it creates opportunities for cooperation, trade, prosperity,” he said, adding that many countries want to take advantage of the opportunities presented by China’s growth.
PM Lee said: “China has also been engaging the region systematically. They have the Belt and Road Initiative. They now have the Global Development Initiative (GDI). Singapore supports these. We are a member of the Group of Friends of the GDI.”
He added: “We think that it is positive, because it is far better that China is prospering and engaged in the region, than that it is operating on its own, outside the rules which apply to everybody else, not properly integrated and coordinated with the rest of the region.
“Or alternatively that it is unsuccessful, poor and troubled. That can cause a lot of difficulty for the region too.”
PM Lee noted that the US has a big stake and substantial investments in the region, with foreign direct investment that is “much bigger than China’s still, although China’s outbound investment is growing”.
Although the US is not as big a trade partner as China, a lot of the goods traded with China ultimately go on to the US, added PM Lee.
“Therefore, our economic ties with the US are very important.”
PM Lee said that while it would be ideal for the US to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) – a free trade agreement (FTA) between 11 countries in the region that, under Japan’s leadership, built on the Trans-Pacific Partnership after the Trump administration withdrew from the deal – this would not be possible from a political standpoint.
Instead, the US has come up with a proposal for an Indo-Pacific Economic Framework, which is due to be launched this week, and which countries such as Japan and Singapore are planning to join.
“We support it, because it is a valuable sign that the Biden administration understands the importance of economic diplomacy in Asia.
“And we hope that one day, the political situation in America will enable them to resume talking about an FTA in some form, and talk about market access. But it may take some time,” said PM Lee.
He noted that while the details of the framework have not been negotiated, four broad areas have been identified – trade, supply chains, clean energy and decarbonisation, and tax and anti-corruption.
Asked about the outcomes Singapore would like, he said: “We are interested in talking about digital economy, about green economy cooperation, sustainable energy, sustainable finance, carbon trading rules.
“We see the opportunity to come to an agreement and we would like to start talking.”
Asked about whether countries in Asia rely too much on trade with China, PM Lee said: “You cannot afford not to do business with China. The opportunities are there, the markets are there, and you want to trade with them, and soon, many countries will be welcoming their investments as well.
“But at the same time, you would like to grow your trade, your links with the rest of the world, with EU (European Union), with America, even Africa and Latin America.”
There is a need to look for potential all round the world, and to keep a balance, he added.
PM Lee said: “China is now a bigger part of the world economy, and therefore proportionately, you would expect more of your trade to go with China, I think that is a normal situation.
“If you say China is a big part, but I do not want to trade with them, it will not only be very costly, but you are setting up for more friction and less chances of maintaining the peace.”
He was also asked about Singapore’s view that China is welcome to join the CPTPP.
“We welcome China to join the CPTPP,” he said. “They have to meet the standards. They say that they will do that… But in the end, the decision is made by the consensus of the members so the other members may well have different views.”
Strengthening Singapore-Japan ties
Asked how Singapore and Japan can improve their relations, PM Lee first pointed to the area of the digital economy.
Highlighting that Singapore has a Smart Nation initiative and Japan has its Digital Garden City Nation Vision initiated by Prime Minister Fumio Kishida, he said both nations can learn from each other to develop smart cities and how to do digital governance.
Both countries can also cooperate on alternative energy and developing sustainable economies.
PM Lee also noted that the Japan-Singapore Economic Partnership Agreement, established in 2002 and revised in 2007, needs to be updated again.
He added that Singapore would like to strengthen its air links with Japan, especially for flights to Tokyo’s Haneda airport.
“The demand is there. Japan is still now restricting travel, but very soon, you will change your rules and we should prepare for that,” he said.