- Lee Hsien Loong, the prime minister of Singapore, warned in an op-ed that a US-China trade war could endanger global security and the world economy.
- “Ultimately, what is at stake is war and peace, and the security and stability of the world,” Lee said. “The United States, China and the rest of the world have too much at stake.”
The brewing trade war between the US and China could undermine not only the global trade order, but also the safety of the world, the prime minister of Singapore argued in an op-ed published Thursday.
Lee Hsien Loong, the leader of Singapore since 2004, wrote in The Washington Post that President Donald Trump’s recent moves to crack down on imports from China could have major implications for the rules-based trading system created after World War II.
Trump and China have gone back-and-forth over the past month with tariffs on goods. Following the announcements of increased trade barriers, economists expressed concerns that the decision could push the two nations into a damaging trade war.
Lee also indirectly criticised Trump’s focus on bilateral trade balances. The US president has consistently cited trade deficits with China, particularly related to the trade of goods, as the measure of success or failure when it comes to trade policy. Lee argued that focus is misplaced, since a country’s trade deficits typically increase when the economy is strong.
“Furthermore, the cause of a country’s trade deficit lies at home,” Lee wrote. “A trade deficit is the result of a country consuming more than it produces, and it is neither caused nor cured by trade restrictions.”
Lee has a stake in the US and China avoiding a trade war: Singapore puts a heavy emphasis on trade to drive its economy. The small, sovereign city-state has used its strategic trading position to grow its economy into one of the richest in Asia, with a GDP per capita ranking second in the region behind only Macao, per the World Bank.
“We are a small, open economy with trade flows more than three times our GDP,” Lee said. “A trade war between the two largest economies in the world will have a big, negative impact on Singapore.”
Singapore’s reliance on trade is also indicative of many of the other economies in the region. Lee cautioned that a trade war’s economic consequences would not be limited to the two combatants.
In addition to Lee’s economic concerns, the prime minster warned that a trade war could undermine international security.
“Beyond the economic loss, strained ties between the United States and China will make it harder for them to cooperate on other pressing issues such as the denuclearization of the Korean Peninsula, regional security, nonproliferation and climate change,” Lee wrote. “None of these issues can be solved without the full participation of both countries.”
Lee urged both countries to diffuse the tensions.
“Ultimately, what is at stake is war and peace, and the security and stability of the world,” he said. “The United States, China and the rest of the world have too much at stake.”
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