Singapore to feel impact of China-US trade dispute if prolonged

Tensions between the two economic powerhouses will lead to fragmented technology markets and, if prolonged, drag down Singapore's economy, says Prime Minister Lee Hsien Loong, who urges both countries to find ways to establish mutual trust.

The ongoing trade dispute between China and the US will not only disrupt global supply chains and lead to fragmented technology markets, if prolonged, it will also drag down Singapore's economy. With competition between the two economic powerhouses being inevitable, both must find ways to establish mutual trust and resolve conflicts, urges Singapore's Prime Minister Lee Hsien Loong. 

He said the trade tension would have a negative impact on the global economy, affecting supply chains and limiting investment as well as research and development. Speaking during the Chinese segment of his annual National Day Rally speech Sunday evening, Lee pointed to the smartphone as an example, in which he noted that Apple iPhones as well as Huawei devices comprised components that were designed, manufactured, and assembled in different countries.

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If the US did not allow its businesses to use parts made in China or sell them to China, organisations in both countries would then have to manufacture their own parts and chips, develop their own smartphones, and build their own telecommunications systems. This would mean visitors to either country would have to carry different handsets to maintain connections, just as Singaporeans did when they previously travelled to Japan, which operated CDMA networks while Singapore used GSM, said the prime minister. 

Lee said: "In such a bifurcated world, we still hope to be able to communicate with all our friends conveniently. So our bigger headache is: Which telecommunication should we install in Singapore? The US or China?"

He added that the conflict placed other nations in a difficult position and no one wished to take sides. Singapore, which viewed both countries as "good friends", was no exception, Lee said. 

The US was a major defence security partner of Singapore, which purchased advanced military equipment from the former, including missiles and military aircraft. Armed forces of both countries also regularly held joint training and more than 1,000 soldiers from Singapore's armed forces had trained in the US.  

In addition, investments from US companies in Singapore exceeded that of other countries and institutions from the two countries collaborated in innovation and research and development programmes. 

Singapore also had extensive economic cooperation with China that included three major city projects between both governments in Suzhou, Tianjin, and Chongqing, and China remained Singapore's largest export market, Lee said. He added that investments from companies in both countries were significant. 

He further noted that, apart from China, Singapore was the only sovereign country in the world with a majority ethnic Chinese population, making its ties with China unique. Amidst the China-US conflict, though, Singapore must act according to its principles and not be influenced by emotions, he said.

However, the city-state's economic growth would be dragged down and prospects bleak if China-US relations continued to deteriorate and the world continued to divide, he cautioned. Local companies with China as their main market would be affected and  those that operated factories operating in China and exported goods to the US would be adversely impacted. 

In urging the two countries to resolve their differences, Lee said China had developed rapidly since it opened up and now was the world's second-largest economy. Its ascension had generated benefits for itself and other global markets, but it also created ripples, he noted.

The world's leading economic power, the US, now must accommodate a more influential and increasingly powerful China. It also must accept that it would be impossible and unwise to block the rise of China, Lee said. 

On its part, as a world power, China also should take consider the interests and feelings of other nations so it could co-exist harmoniously with all countries worldwide, he said.

He added that since competition between the US and China was inevitable, both governments should seek to establish mutual trust and identify ways to resolve conflicts. 

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