BEIJING: The problems of the next downturn can only be tackled if longer-term issues such as the strategic rivalry between the United States and China are addressed, Singapore Senior Minister Tharman Shanmugaratnam said on Thursday (Nov 21).
“The central problem is managing the strategic rivalry between the US and China, with technological rivalry and the possibility of bifurcated supply chains being the most important dimension,” said Mr Tharman during a panel discussion at the New Economy Forum in Beijing.
“If we don’t solve that problem, it’s going to be very hard to solve the underlying economic problems that make this cycle in danger of a downturn,” said Mr Tharman.
The real issue right now, Mr Tharman said, is not the next downturn, but the underlying factors, including weak private investment, as well as a slowdown in innovation and productivity growth.
“If we end up with a world of bifurcated technologies, standards and supply chains, it’s a world of less innovation, less dynamism,” said Mr Tharman.
Senior Minister Tharman Shanmugaratnam attended the New Economy Forum in Beijing. (Photo: New Economy Forum)
But thinking of the long term as a constant short term is “fundamentally wrong”.
“The solutions to the problems we face today are not about more money, be it fiscal or monetary injections,” stressed Mr Tharman.
“It’s about confidence and innovation and I think by any measure, in both mature and developing economies, there’s huge scope for investment that is still untapped.”
Opportunities include areas such as climate change, digital infrastructure in mature economies, as well as the developing world.
Mr Tharman’s comments come amid the backdrop of a potential phase one deal between Beijing and Washington, which have been engaged in a trade war for more than a year.
The two countries have also seen tensions over Hong Kong, Taiwan, the South China Sea and on the technology front.
READ: China says will strive to reach ‘phase one’ trade deal with US
READ: US-China trade war could spark real war: Kissinger
Besides the China-US strategic rivalry, Mr Tharman added that other potential surprises in the next downturn include developments in the middle east and whether the politics of the day can respond to social anxieties.
“These are the three unknowns. But they are not unknowns beyond … our ability to shape the future,” said Mr Tharman.
“Our responsibility is to shape that future – to go for competitive co-existence between the US and China; to be able to manage very difficult situations in the Middle East without things sparking out of control; and thirdly, to get some semblance of the strengthening of the middle and the center in politics.”
The New Economy Forum was launched by US media mogul Michael Bloomberg in 2018 to promote cooperation with China.
The second edition saw 500 government and business leaders, as well as academics take part.
