Singapore minister says country will not take sides as there is no win-win scenario in a fractured world

Singapore will not take sides in geopolitical disputes and will instead take pro-rule of law stances, the country’s Education Minister Chan Chun Sing said in his keynote address at the Morgan Stanley Asia-Pacific Summit on Wednesday. Singapore.

He said the world should remain interdependent despite breaking pressures, because any kind of divide would make individual countries “sub-optimal” and suffer economically.

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“With interdependence comes risk, but a fragmented world with less interdependence, where people and big countries believe they can improve their security and indirectly aggravate another country’s insecurities, that cannot be a win-win situation,” Chan said.

“It is important to remember that a more interdependent world is a safer world. But today, due to pressures, both national and global, it is tempting to think that if the world is fragmenting, two different blocks, each of the different blocks to be safer.”

Chan said that if fragmentation continues, countries and businesses will not function optimally, “rather than… enjoying the past 50 years of rapid growth based on a globally integrated system.”

Today, the rules-based international security system and trade order are once again “under strain” and cannot be “taken for granted”, he added, citing the example of the cold War.

He cited Russia’s war in Ukraine and the World Trade Organization dispute settlement crisis as some of the flaws in the system.

Speaking directly to business leaders and investors at the investment conference, Chan called for global integration.

“Global companies have a voice and need to make their voice heard, that you prefer an integrated world and not a fragmented world,” Chan said.

He said Singapore would also play its part in building bridges and “interoperating” between the fragmented blocs.

“We believe there will be a premium for connectivity, stability, progressiveness, cohesion and trust,” Chan added.

The fragmentation is starting to hurt the stability of the global economy, Morgan Stanley Investment Management said in a separate note on Wednesday.

De-globalization and broken supply chains, for example, are fueling inflation, said Andrew Harmstone, the company’s senior portfolio manager.

“Global trade as a percentage of GDP has in the past grown very rapidly, which has contributed to the very low inflation rate. But the trend of reshoring will tend to reduce trade,” he said.

According to the Hinrich Foundation, although terms such as “friend-shoring” have been added to the US trade policy lexicon and those of other countries like Japan, little has been revealed about their meaning.

“If governments seek to intervene in a supply chain, they must argue that they observe risks better than companies. But it is unclear what market failure friend-shoring policies will address without fragmenting more the world trading system”, said Halit Harput, author of the Hinrich report.

Chan said Singapore would continue to refrain from taking sides, but would take consistent positions.

“Over the past few months, when Russia entered Ukraine, we opposed it. People ask, is this a pro-American decision? Or is it an anti-Russia or anti-China decision? Neither. When the USSR moved to Afghanistan, we opposed,” Chan said.

“We believe that the rule of law, especially internationally, is the best guarantee for the survival of a small country.”

“And that not only applies to Singapore, but I would suggest that it applies to all ASEAN countries as well.”

And while positive words were exchanged between US President Joe Biden and Chinese President Xi Jinping on the sidelines of Monday’s G20 meeting, Chan said, it’s important to watch the actions that follow.