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US-China trade war and its impact on the global economy

BEIJING: While the United States and China are working to avoid a trade war, there is a risk of miscalculation which would have ramifications on the global economy, said Singapore’s Finance Minister Heng Swee Keat.

Mr Heng was speaking to Singapore media on Wednesday (Jun 6) during his nine-day visit to China, which ends on Friday.

His comments come on the back of growing trade tensions between the US and China. In March, the US announced plans to impose tariffs on steel and aluminium imports. China responded by halting tariff concessions on US products including pork and fruits.

Mr Heng stressed that it is crucial to avoid further escalation.

“I think the Chinese leadership has exercised restraint in their comments and they are putting in effort to avoid such an outcome,” Mr Heng said.

“And I would say that even the US leadership is aware of the potential impact of this. A trade war will have very destabilising effects on the global economy, first and foremost,” he said.

“I think it will have a rather unpredictable impact on the financial markets in the first instance.”

Mr Heng said it was not too long ago when the world saw a global financial crisis, adding that it was important to not “meddle with this rather potential flashpoint”.

“I believe that the serious thinkers on both sides appreciate the implications. What I hope does not happen is any miscalculation. Because in a major negotiation like this, the risk of brinksmanship is always there. I hope that it does not happen,” he said.

PROMOTING FREE TRADE

Mr Heng said it is also important to promote free trade.

“Within ASEAN, we are consolidating the ASEAN Economic Community. We are negotiating ASEAN agreements with China and with all our key partners and there is strong interest to conclude the Regional Comprehensive Economic Partnership,” he said.

But he added that it would not be easy, particularly during this period when there are elections happening in various countries.

“But I think we should try. The very fact that we stand by free trade and that we seek to enhance cooperation is itself a very important signal, so I hope we continue to do that and make progress in that area,” he said.

But Mr Heng also warned that there are also those who will lose out as a result of free trade – which is why it is important to address structural issues.

“While free trade benefits parties in the broadest sense, there are winners and losers in free trade. Countries will have to look at polices that can help losers adjust to new configurations. That’s why in our case, we always have free trade policies and that’s why we take economic restructuring so seriously, in particular, the retraining of our workers, to make sure that our workers continue to have good jobs, continue to enjoy a rising standard of living,” he said.

BOOSTING ARTIFICIAL INTELLIGENCE CAPABILITIES

Mr Heng’s visit to China included trips to Nanjing, Shanghai and Beijing. In Nanjing, he attended the first Sino-Singapore Artificial Intelligence Forum.

“I think China is investing very serious effort in this area. There’s a very high level of awareness both at the political leadership as well as the leadership of the companies,” Mr Heng said.

“The people value the convenience, they value the efficiency, they value the variety that this technology can bring.”

To speed up the adoption of AI in Singapore, Mr Heng said it is important to invest in research and development, and to try new business models.

Another crucial factor is to address issues relating to data confidentiality and ethics.

“The machine itself doesn’t make decisions. It doesn’t make moral decisions but what we program into the machine and the algorithm that guides its decision will have very important moral implications and we have to get a common understanding of our people as to how this decision will be executed,” he said.

CONTINUING GOOD TIES WITH CHINA

During his visit to Nanjing University, Mr Heng stressed that Singapore’s younger leaders will continue to maintain close ties with China.

As a fourth-generation minister himself, he also shared his impression of China’s younger leaders.

“I met Chinese leaders at various levels early on,” Mr Heng said. “From my first visit in 1990, to around 1997 when I accompanied Senior Minister Lee Kuan Yew on many of his visits here. Over the years, I’ve interacted with them in various forms – the Ministry of Trade and Industry, Monetary Authority of Singapore, Ministry of Education.

“What strikes me about the Chinese leadership is that the Chinese leaders are selected from a very rigorous system.

“When I look at the CVs of Chinese leaders, when I spoke to them about their experience, it is clear to me, they have undergone a series of tests before they are where they are. So in terms of abilities, it is impressive,” he said.

And to ensure that Singapore can take its friendship with countries in the region further, Mr Heng said it is important to understand its own development priorities, as well as those of the other parties.

This way, Singapore can build on what has been achieved by its previous leaders.

Mr Heng is expected to meet Singaporeans living in Beijing on Thursday. He will conclude his trip on Friday.

Source: CNA/de
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