Singapore’s top trade official said the city-state is willing to facilitate a dialogue between the US and China to repair their relationship, as he described growing tensions between the world’s biggest economies as detrimental to the world.
US-China tensions “have serious consequences for the rest of the world,” Gan Kim Yong, Singapore minister for trade and industry, told Bloomberg Television’s Haslinda Amin in an interview Thursday. “Singapore as you know has always wanted to do business with both.”
“We will also do our best to facilitate dialogue and engagement with the US and China through our businesses, through our officials, so that we can foster a collaborative relationship,” he said.
Singapore’s economy relies heavily on trade and is vulnerable to shocks resulting from disruptions in commerce, especially involving China, the city-state’s No. 1 trading partner. The latest trade tensions stem from the US’s effort to clamp down on China’s access to critical semiconductor technology and to impose export controls.
“All of us are concerned and watching this development very closely,” Gan said, referring to the export controls. “Singapore’s interests and interests of the rest of the world are for the US and China to have a stable relationship as well as a constructive one,” he added.
Singapore and other Southeast Asian governments have been focused on building their relationship with the US around talks on the White House’s Indo-Pacific Economic Framework.
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While participants have celebrated renewed attention from Washington on the 10-nation region and its neighbours, that agreement has been under fire for being too focused along counter-China lines and bearing too little substance — especially with no market-access deals that the trade-reliant nations across Asia crave.
While the pace of Singapore’s economic expansion is expected to moderate to a sluggish 0.5%-2.5% this year, it’s confident of avoiding a recession amid a boost from China’s reopening.
“We depend on the growth of the world to fuel Singapore’s growth,” Gan said, noting that forecasts will be adjusted depending on the evolving global environment.
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Education Minister Chan Chun Sing echoed similar sentiments during an Investment Management Association of Singapore event, saying countries and investors have the “responsibility to play a constructive role even amidst the ongoing US-China dynamics.”
Rising Rents
Against the backdrop of Federal Reserve Chairman Jerome Powell delivering hawkish messages on its inflation fight this week, Gan said “the jury is still out” on whether the US will achieve a soft or hard landing and its impact elsewhere. Countries are having to balance the need to fight inflation with supporting growth, he said.
Closer to home, Gan commented on a critical issue facing multinational businesses as well as expatriates and local residents in Singapore: still-soaring rental costs. He noted that broad-based elevated inflation “is going to stay for some time,” and officials were encouraging firms to focus on boosting productivity and revising their business models with an eye also toward cost savings and reducing waste.
While the government has instituted various cooling measures, including in the budget last month, rental costs remain high and a pinch on cost-of-living especially for the expatriate community and multinational firms. Rents in the city-state also saw strong growth in 2022, soaring about 30%. They are expected to climb a further 10% to 15% this year.
As Singapore embarks on a spate of construction projects that were delayed due to the pandemic, some 100,000 new units to be completed through 2025 should alleviate those rental costs somewhat, said Gan. He focused more on those supply-side issues, rather than further policy changes on top of the budget measures.
“It’s important for us to continue to assure people that our building programs are catching up,” Gan said. “It is definitely important for us not to have a knee-jerk reaction and introduce structural changes to the property market to address a temporary issue.”
