SINGAPORE: A “momentous” trade deal between superpowers China and the United States is the basis for the two countries to work together and develop strategic trust, Singapore’s Minister for Trade and Industry Chan Chun Sing said on Thursday (Jan 16).
Described as a “Phase 1” deal, the agreement allows both countries to better understand how to work with each other, said Mr Chan during an interview ahead of the Economic Development Board’s year-in-review.
He noted that Singapore has some cause for optimism due to its investment pipeline, new competitive advantages, the skills of its new generation and the upskilling of middle-aged workers. However, such optimism has to be guarded, he said, as he touched on the US-China trade tensions that have been going on for about two years.
“It is not just about a trade deal. It is about how you implement the trade deal and how you resolve outstanding issues,” he said.
While the signing of the trade deal is encouraging, “we must be cognisant that there are still many differences between the US and China, ranging from technology, how they organise their own production system, their R&D system and in general, how they organise their own economic system”, said Mr Chan.
“We should not overlook some of these differences that still remain and we will have to watch this closely,” he added.
While the deal helps to calm the markets and bring some people relief, the long-term challenges are not going unnoticed, said Mr Chan.
“I think for many of the companies, from what I know and from what I talk about to them, I don't think they look at it one move by one move. They look at the trend and when they look at the trend, they know that there are some fundamental issues between China and the US that remain unresolved,” he said.
The companies base their plans on those long-term forces and diversify their risk, he said.
At the year-in-review, EDB's chairman Dr Beh Swan Gin responded to a question about the effect of the US-China trade tensions on investment commitments from these countries.
The trade tensions have "certainly caused uncertainty" as firms are adopting a "wait and see" attitude, said Dr Beh, adding that in the US, business investments have dropped considerably in the past two years.
However, he added: “Fortunately for Singapore, at least as far as our fixed asset investments are concerned, the companies that are investing are really having a long-term view of the opportunities here in this region and of course in their respective industries.”