Ms Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF),
Mr Zhou Xiaochuan, Former Governor of the People’s Bank of China,
Ladies and gentlemen.
A very good morning to all of you in Singapore, Beijing and across the world. In more ordinary times, we would have gathered together in person. Instead, we now have participants watching the livecast from across the world, reflecting the new normal that we live in.
2. Tens of millions of jobs have been lost. This pandemic will reverse progress made over the last three decades in reducing global poverty, and will certainly increase global inequalities, both within countries and across countries.
3. Along with these economic challenges, we are also facing a global crisis of trust. Domestically, COVID-19 has challenged and at times eroded public trust towards governments. Anxiety levels have risen due to employment and economic woes. Internationally, existing geopolitical tensions prior to COVID-19 have also intensified. Trust in multilateral institutions and platforms has diminished, resulting in their paralysis in some instances.
4. In response to the global economic downturn and growing trust void, countries are trying to build greater economic resilience by insulating themselves from external developments. To avoid being critically affected by sudden shortages in essential goods, many countries have re-shored supply chains closer to home, and boosted domestic production capabilities. As protectionist and anti-globalisation sentiments grow, many countries have responded by turning inwards.
5. Singapore is not immune to these challenges. In fact, as a small and open economy, we are even more sensitive to global developments. However, we believe greater economic resilience comes from supply diversity and greater interdependence, not self-isolation or independence. Our belief is interdependence, rather than independence, from the global supply chains. Over the years, the rules-based multilateral trading system has brought economic growth, stability and peace to many countries. This is not to be taken for granted. While globalisation may have its shortfalls, there will be a net drop in overall global welfare if every country pursues economic independence single-mindedly without regard for its neighbours. We will be worse off and we can easily go back to history, almost a hundred years ago, to the time before the Great Depression.
6. COVID-19 has been an important reminder of how inextricably interdependent we are, and that economic independence is not a viable option, or the most preferred option. Given the common global challenges and integrated networks in today’s world, countries and companies have a shared and unavoidable interest to remain interconnected.
7. In Mandarin, there is a saying – 闭门造车. It cautions against walling oneself from the outside world. Interdependence also enhances global security, as parties have shared interests in one another’s success instead of a zero-sum mentality. In addition, we can strengthen economic resilience by having stronger and more diversified networks, both for the supply chains and for the markets. The path to increased resilience lies not with independence, but with greater interdependence. Independence just means that we have concentrated all the risk in one country - our own country. And that does not necessarily mean greater resilience.
8. To share the benefits of interdependence, trust is fundamental. I would like to offer three suggestions today - the 3 “C”s. The courage to Commit, to stay Connected, and to Confront the challenges ahead.
The 3 “C”s
9. First, we all need to have the courage to Commit to a rules-based multilateral trading system. The rules-based trading system has imposed responsibilities on all participants and sought to create a stable environment for all. Such transparency and predictability form the basis of trust amongst our businesses and countries. It fosters confidence that international markets remain welcoming, fair and inclusive. With evolving realities such as pervasive digital economy developments, we will also need to work together to update the rules-based order. Not just to uphold the current world order, the current world trading system, but also to update the system in accordance to the current realities and demands.
10. Second, we must have the courage to stay Connected with each other and with the world, to build mutual understanding and establish credibility as reliable economic partners for each other. Despite cross-border restrictions due to COVID-19, trade and financial connectivity have kept up activities for the livelihoods of our people and the survival of our businesses. Despite physical barriers that may hinder face-to-face interactions, digital tools have enabled us to transcend physical distances and geographical boundaries, and to keep up conversations with our domestic and international stakeholders. And today is a fine example of how we have the determination to stay connected and not be defeated by a virus. Now we have to continue developing such modern connectivity in trade, finance and digital platforms, which will allow countries to leverage on our comparative advantages, so that neither COVID-19 nor geopolitical tensions may divide us.
11. Third, we must have the courage to Confront our respective domestic long-term challenges. To mitigate the impact of the crisis, we need to muster political will and resources, to facilitate distribution of the fruits of trade, to redistribute the benefits from trade to help our businesses and people adjust to new realities, and embrace new opportunities. Globalisation, digitalisation and greater integration all require us to make adjustments, and that adjustment will allow us to leverage on our respective comparative advantages. And that is how we have been able to seize the opportunities over the last few decades to uplift millions from poverty and to break through the middle-income trap. Governments, and those who have benefitted from globalisation, have a role and also a responsibility to help those who have been adversely impacted, either absolutely or relatively. Without strong and coherent governance, countries will be faced with threats of social fragmentation. There will be a domestic pushback against greater integration through globalisation or digitalisation.
12. In the tyranny of populist politics against sound economics, we must lay the foundation of trust among our populace, businesses and political leadership. This will provide the political space that governments need, to lay the building blocks for a rules-based global order and connectivity, for the long-term well-being of our country, people and the world. Without coherent government, without domestic confidence, few, if any, governments will have the courage or the political space to stand up on the international stage to continue to support globalisation and further integration. So it is a positive cycle that we need to engender – clear, coherent policies leading to long-term benefits for our people, which in turn allow our people to support greater integration at the global level that will bring about more benefits for our people, and that virtuous cycle will continue. On the other hand, a negative cycle can also easily form - without confident, coherent and consistent policies, we cannot have a confident population that will benefit and support globalisation and further integration. And as the world fragments, each and every one of us have fewer opportunities and the forces of nativism and protectionism continue to grow, we will be on a downward spiral. So the choice is before us.
13. In our crisis response, Singapore has held steadfast to these principles, staunchly supporting the multilateral trading system, upholding our position as an open and connected business hub, and strengthening our social compact. It is challenging for a small country like Singapore, but it is the right thing to do. If it is the right thing to do for a small country, perhaps it is also the right thing to do for many bigger economies.
14. As one of the world’s largest economies, China now has a historic opportunity to win global trust by exemplifying the standards of behaviour towards global trade – from having open markets, sharing technologies on open platforms, to being collaborative and connected with the region. How China engages with the rest of the world today will impact the global trust towards China’s rise.
15. The world is listening and watching intently as China implements its ‘dual circulation strategy’. This pivots China from an export-led development model towards one where domestic and international economies are both mutually reinforcing. This is to be expected for China’s economic trajectory at this point of history. In line with the renewed global emphasis on economic resilience, this is not unexpected that China and Chinese companies are also seeking to secure and diversify their supply lines and markets, by ‘going beyond China’ to access the world market, and to make China’s market accessible to the world. And that is why, a few years ago, Chinese companies have already embarked on this strategy of going beyond China – 走出去. Chinese companies no longer want to be seen as Chinese companies. They want to be seen as global companies, integrating into the global supply chains and markets. This is a positive sign for the rest of the world. The greater the interdependence between China and the rest of the world, the safer the world will be and the greater our chance for peace and security, because each and every one will have a shared interest in the other parties’ continued success and prosperity. Therein lies new opportunities in the Chinese market, in the world market, and for China and the world to work closer together, going forward.
16. Apart from China’s economic rebalancing, Chinese leaders have also advocated shared benefits, shared responsibilities and shared governance across all countries in mutually beneficial integration. At the 3rd China International Import Expo last week, Chinese President Xi Jinping spoke of China’s plans to pursue deeper regional, bilateral, and multilateral cooperation. We look forward to China’s continued contribution to the global trade architecture, for the greater prosperity of the Chinese people and for the world at large.
17. While uncertainty shrouds the endpoint of the pandemic, I am heartened that many markets in our region have managed the situation pretty well up to now. To further our commitment to a rules-based system, Singapore has been actively involved in efforts by ASEAN and its dialogue partners to enhance the regional trade architecture, through the Regional Comprehensive Economic Partnership (RCEP) agreement. We are pleased with the significant progress made and look forward to its signing soon. This is testament to the region’s collective commitment and determination to ride out the global pandemic and to seize the opportunities now as the global supply chains reshuffle. The reshuffling of global supply chains has started even before the global pandemic, and it will be accelerated by the global pandemic. This is an opportunity for the Asian economies involved in the RCEP to position ourself as an integrated, attractive proposition for the global investors as we ride out the pandemic and plant the seeds for future integration, plant the seeds for future growth. On connectivity, Singapore has worked with many like-minded partners to launch a series of supply chain and digital connectivity initiatives, and we are working to progressively open up our borders in a safe and sustainable way. On confronting domestic challenges, Singapore has spared no efforts to extend job and industry support, to facilitate business continuity and the well-being of our people.
18. As Ms Kristalina mentioned, our effort is not just to sustain the current businesses. More importantly, we are spending more of our resources to help our businesses pivot and position for the new economy. So we are not playing defensive of just trying to sustain what we have, we are putting in the foundations for the next lap of growth by making sure that we exit out from industries that are not so bright in their future towards industries and sectors that are stronger engines of growth going forward. This is an ongoing process for the Singapore economy, as always. But this work has taken on greater urgency because of the fundamental changes that have been brought about by the geopolitical forces, the pandemic and the technological changes. Our fundamentals and relations in the region remain strong. The existing trade architectures, cooperation initiatives and community building mechanisms are useful enablers for our recovery. Platforms such as today’s Caixin Summit are a salient reminder that we come together with more common interests than differences.
19. COVID-19 is a crisis of a generation. But it is also an opportunity for this generation, to define values and ideals for ourselves and our future generations. We have both a historic opportunity and responsibility to rebuild global trust. For us to continue to have the courage to commit to the path of greater interdependence rather than independence. For us to have the courage to stay connected amidst the pandemic and most importantly for us to confront our own domestic challenges so that each and every one of us can be confident in our own right to go onto the international stage and to speak up for greater interdependence, greater connectivity so that we can all leverage on our respective comparative advantages for the next lap of global growth. And that we will not relearn the lessons of history, almost a hundred years ago, where countries regressed back to autarky and beggar thy neighbour policies. So this is both a historic opportunity and historical responsibility for countries big and small. As leaders, and members of the global community, we must work together to rebuild domestic confidence and international trust. The two must go hand-in-hand, for us to emerge stronger, for humanity to benefit from this greater interdependence. And this is why in Singapore we have a motto: emerge stronger. On that note, ladies and gentlemen, we welcome you to partner us and in Singapore, we stand ready to partner like-minded countries and companies to continue furthering the cause of globalisation, multilateralism, interdependence, so that we can all build a better future for ourselves and for generations to come.
Speech by Minister Chan Chun Sing at the 11th Caixin Summit
Speech by Minister Chan Chun Sing at the 11th Caixin Summit
Ms Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF),