Good afternoon. Great to see you, Prime Minister. This is the Prime Minister's first visit also to China as prime minister.
As prime minister, I'm no stranger to China. I've come to China almost every year.
And you speak the language, huh?
And I think Singapore is also the largest investor in China still.
And for 12 consecutive years. Yeah. And I think you were also in Beijing and meeting with President Xi Jinping.
The mood was good. Well, we have a close partnership, very broad and substantial. A very unique partnership. We call it an all-round, high-quality, future-oriented partnership.
Wow. That sounds very substantial.
It sounds better in Mandarin.
Does it? A lot of things sound better in Mandarin. Also, when you say 'slow is fast', you know, or a crisis, I think it has a double meaning.
So, maybe, Prime Minister, I know that you have a few initial thoughts and then we'll have a dialogue for half an hour.
Well, thanks again, Børge, for the introduction. I think we are meeting at a time of profound changes in the world. After the end of the Cold War, the world saw an unprecedented period of global integration, characterized by open markets, rapid free trade, rapid movement of capital, goods, ideas and people across borders. And this brought benefits to many people, and for a long time this vision held true. Davos embodied this vision — a vision that global integration would deliver peace and shared prosperity. Unfortunately, I think the world is changing. We see over the years more pressures; discontent against globalization has risen. It started way back. I remember in 1999, when the WTO was held in Seattle, you already had demonstrations and protests there. But since then, year after year, you see in advanced economies cities being destroyed because factories are closed, livelihoods get disrupted, jobs are displaced. And in more recent years, because of COVID and the concerns over supply security, because of conflicts in Europe and the Middle East, now concerns about security have risen, and we are in a very different position today. Global norms, global rules are weakening, global institutions are weakening, and economic nationalism is replacing win-win cooperation. For small countries like Singapore, we are worried because we have limited options, we have limited bargaining power, and we risk being marginalized. But even bigger countries, I think, will have challenges dealing and operating in such a new environment, because it will be harder for everyone to deal with common threats — be it pandemics, climate change or financial shocks. So I think our response has to be collectively to try and still harness forces that will bring people together, promote integration, bring down barriers and strengthen multilateralism — multilateralism that is more resilient, more inclusive, and better suited to the realities of our time. So Singapore will do our part in this endeavor, whether it's forging partnerships, updating global rules, or advancing dialogue, working together with partners like the WEF. The efforts may seem small and incremental, but if like-minded countries everywhere were to do their part, then collectively, I think we can make a difference. And then step by step, hopefully, we can lay the groundwork for a new and more stable global order in time to come. Thank you.
I think the Prime Minister deserves an applause for that. Picking up on your last point, what kind of order or more stable system could we foresee in the future? I think we had one world order after the Cold War, and that order is not really there anymore, but we don't know what is coming. The Premier said this morning that we have to avoid the law of the jungle, or the jungle growing back. But how do you see this new system of cooperation? You could see a more multipolar system. But at the same time, you see soft power replaced with strong power. You see interest spheres also being developed. So multipolarity is one thing, but aren't we seeing more and more a system of interest spheres, and that for smaller, medium-sized countries would be quite a challenge.
It is going to be a challenge. I think, frankly, no one knows what this new order will look like. It's still very early days. We are in a period of transition and a period of evolution. There will be critics of today's system that say it's good that now the system is changing, but I would also say let's have a care — let's not be too quick to cheer, because what is the alternative? So we have to think through very carefully how we can evolve a better system. And I'll give you two examples of global institutions that have come under pressure but over the years have been able to reform and upgrade themselves. First, the IMF. I started work as a young economist in the 90s, so I still remember vividly the 1997 Asian financial crisis. People till today call it the IMF crisis, because the IMF came in with strict austerity, one-size-fits-all measures, and there was a reaction. But look, over the years the IMF has reformed, it's updated itself. It's customized its approaches, become more responsive, more transparent, and it has taken into account local circumstances and context. It's an improved, upgraded IMF. To be clear, there's still reforms to be done. For example, and in particular, where it comes to the shareholding and governance structure, which still reflects a world after World War II and needs to be adjusted to better reflect the realities of today's economy. But that's work that needs to be done and can be done in order for the IMF to maintain its credibility and legitimacy. Second, the WTO. It has brought about free trade, a rules-based trading system which has benefited many countries. But there is a feeling that the system is not working as well. And indeed, some of the WTO rules have lagged behind the realities of today's economy, particularly in digital trade. So what do we do? And again, the response is not to jettison the rules but to think about how it can be improved. And a few countries, like-minded countries — Singapore working with Japan and Australia — we have come together to initiate a joint initiative on e-commerce. And after five hard years of negotiation, today more than 70 countries have agreed on the first set of rules for digital trading. It's the building block for the first set of global rules on digital trade. And I give these illustrations to show that it is possible to update, evolve, improve the multilateral system and global institutions that we have today. It is painstaking work. But there is no alternative. A new system does not just appear by magic. You have to work at it. And with creative, pragmatic solutions, bringing along like-minded countries — if we are able to start some of this work, do the building blocks one by one, then in time to come others that are more ready can join in. So this is what we would call a flexible multilateralism. It's not about an ad hoc array of different rules, but starting first, laying the building blocks, and eventually others can join in and we can steer progress in the right direction.
It's very interesting, this notion of flexible multilateralism, because congratulations on getting an agreement around, I think, what they call these plurilaterals on e-commerce. It means that countries that have common interests come together, and now we have more than 70 of them, forming like trade rules in e-commerce.
And later on it can be more and more countries contributing or being part of it, and then it could even turn into something that is multilateral.
But with all these kind of more plurilaterals and also bilateral trade agreements getting too complicated, and regional ones and all that, don't we end up with a big spaghetti bowl then?
There is that concern, but again I ask, what is the alternative? Do nothing? It cannot be do nothing and hope that someday along the way something new emerges out of nowhere. I think we have to start from somewhere. And if we start with like-minded countries putting in place some basic building blocks, but always with a view that whatever we do, it is open, it's inclusive — others may not be ready to join, but in time to come they can join and we can multilateralize these efforts.
Exactly. Has also Singapore changed its approach? I think traditionally you were doing more trade agreements under multilateral agreements like the WTO, but have you embarked on bilateral trade agreements, mega-regional ones? Some countries are really getting a lot of agreements there. I think number one is Chile with like a hundred of them.
Well, we did start with many bilateral FTAs too. Yeah. And then over time these FTAs became the building blocks for a more robust multilateral system. Today, when we look at the situation and some of the rising barriers to trade, again our response would be to still work at reforming and updating the WTO, but in parallel we are engaging with like-minded countries to find ways in which we can strengthen our trade and investment links. And we start with the countries nearest to us — Malaysia and Indonesia, for example. We have a special economic zone now with Johor in Malaysia. We are working with Indonesia where there's a free trade zone in the Riau Islands just next to us. So we have very close links with our closest neighbors. But even within Southeast Asia, we have a very close link with Vietnam. The Prime Minister of Vietnam is here. We have a connectivity agreement. We are doing something like more than 20 industrial parks in Vietnam. And then for the whole of ASEAN, we are looking at ways to better integrate ASEAN and make us more united, be able to offer a more competitive single market to investors. So that's within ASEAN, but outside of our region we are also engaging different blocs. We already have very close links with China, Japan, Korea, India in Asia, but we are engaging outside of Asia, for example, with the EU, with the GCC, with Latin America. So we are trying to find ways to strengthen links with like-minded entities everywhere around the world.
If you look at the global economy, we've seen that the growth this year was expected 3.2, then it was revised to 2.8, now to 2.5, some have revised it down even to 2.3. Yeah. And the WTO said the other day that on goods they even expect maybe a contraction of 1.5%. So trade used to be the driver of growth. I guess we need to find a different driver of growth moving forward. Could that be the new technologies? Could it replace trade? And how fundamental is the change also on the trading landscape and the economic landscape? How do we avoid sluggish growth for a decade to come, like in the 70s?
I think trade will still exist. There is a move towards security, resilience, greater self-sufficiency, but frankly, no one can be completely self-sufficient. Trade will still be around. Maybe it will not grow as much as it used to, but I believe there will still be trade, but the patterns of trade will change and evolve. Different supply chains, different configurations. And for Singapore, we just want to remain competitive and relevant and stay at the center of these evolving trade links. So trade remains relevant but changing patterns. Technology will be a new driver. I'm quite sure of that. I think the move towards sustainability will also be another driver. We all want to decarbonize. We want to get to net zero. We will need to harness new sources of clean and renewable power. We need to decarbonize industries. So both technology, new technologies, especially digital technologies, and sustainability will, I think, power the economy of the future.
It's interesting, we heard it this morning too, that digital trade is growing 8%, while trade in goods, manufactured goods, is almost peaking. We also see services are growing much faster. I guess this is relatively good news for Singapore though, because you're strong in services and you're strong on the digital and technology side.
We want to be strong in everything. But yes, we have some strengths. We have some strengths in financial services, logistics, we have some strengths in digital technologies, and we will continue to harness these strengths to stay competitive and relevant. Life is always difficult for a small country. History has never been kind to small nations. So we have to work extra hard compared to bigger countries to keep relevant and stay alive.
But the 60 last years have not been that bad for Singapore though. It's a miracle, isn't it?
