1. Distinguished Guests, Ladies and Gentlemen, good evening.
2. It is a pleasure to join you today at the FutureChina Global Forum. This is a year of great significance as it marks the 30th anniversary of the establishment of ASEAN-China dialogue relations.
3. Over the last decade, ASEAN-China trade and investments have more than doubled.
4. Now, the question is if this trajectory will continue in the face of the disruptions brought about by:
- COVID-19;
- Technological changes;
- Evolution of business models;
- Evolution of global supply chains; and
- Fluid geopolitical dynamics.
5. Today, I will first examine two assumptions, before discussing the work needed going forward, if we are to achieve even tighter economic linkages between ASEAN and China:
- The first commonly held assumption is this: Geography is Destiny.
- The second commonly held assumption is that Demography is Destiny.
Assumption 1 – Geography Is Destiny?
6. Let us first examine the assumption that Geography is Destiny. Historically, geographical distances have shaped economic cooperation. By virtue of Southeast Asia’s geographical position, goods, capital, people and culture have flowed between Southeast Asia and China for thousands of years. Physical proximity was a natural enabler of the development of interdependencies.
7. But three factors have changed and challenged this commonly held assumption.
8. First, connectivity, especially new dimensions of connectivity, and the ease of connectivity may be the real determinant of economic relations, rather than geography per se.
- The cost of transportation has come down with technological advancements.
- Thereby blurring geographical boundaries; and enabling new, and wider connections.
9. Second, new modes of connectivity have emerged. The modern economy rests on digital connectivity – for example, 24/7 online commercial and professional services – which transcends geographical distances. Where COVID-19 has created physical separation, it has also deepened digital connectedness.
10. Now, third, in this light, the non-physical dimension of connectivity of rules and regulations has become even more important. They form the basis of economic cooperation and when businesses consider the issue, they commonly ask: are we on the same standards, the same platforms, and are we on the same trade agreements?
11. Therefore, while geographical proximity can promote interdependencies, it alone will not ensure sustained economic cooperation.
Assumption 2 – Demography Is Destiny?
12. Let us look at the second commonly held assumption that Demography is Destiny. This assumption is not without valid reasons – demographic forces can drive economic cooperation.
13. China is ageing fast. Its labour force is becoming more educated and skilled.
14. On the other hand, ASEAN has a young population and workforce. Its growing middle class is a sizeable market.
15. There is therefore great potential for both parties to leverage the complementary demographics for markets and production.
16. The exchange of skills and technology will further enhance these complementarities.
17. It will certainly be the case as China embarks on the next phase of its economic development, which is to go beyond China, as we commonly say “⾛出去”. Chinese enterprises nowadays want not just to be seen as Chinese companies, but as global companies.
18. However, this assumption is also not a given:
- First, the theory that labour-intensive industries will naturally re-locate to labour-rich countries will be increasingly challenged.
- The operating context and demands on companies today are different. Many are pivoting to high-tech, and high-value goods and services. Mass production is giving way to mass customisation. Automation, access to skilled labour, Intellectual Property (IP) protection, and the ability to mobilise talent and capital will become more important factors as to where companies site their investments and productions. Quantity of labour alone will not be sufficient.
- Now, the market for labour and capital is also increasingly global, rather than local or regional. Hence, both ASEAN and China must find and develop new complementarities beyond labour supply or labour costs.
Advancing Asean-China Economic Cooperation
19. From the above, you can surmise that I do not see geography or demography alone as destiny. While they do provide fertile ground for closer integration of the regional economies, we must not take this for granted.
20. Today, China has evolved into a key engine of global economic growth. It is seeking to diversify and strengthen its economic resilience through its dual circulation strategy. It is also seeking to secure its supply chains and its associated networks. As these networks go beyond China or the region. It is a global supply chain network and a global value chain network that China seeks to secure.
21. ASEAN is also working on diversifying our sources of growth, markets and supply chains. Both ASEAN and China are looking for new growth areas in the 4th Industrial Revolution. So how do we seize these opportunities in this current environment for both China and Singapore, and for both China and ASEAN? I would like to suggest a few considerations.
22. First, adopt a long-term view. Different countries will have different priorities at different points in time. To meet evolving economic priorities, countries will look towards trusted partners in a world of flux and uncertainties to secure their IP and supply chains.
23. They will look for partners who can invest in them for the long term and have a vested interest in mutual success. These will be partners who adopt a “Prosper thy neighbours” policy, rather than those who extract or exact the maximum short-term interests for themselves.
24. Second, we can build an open and inclusive regional economic architecture. Countries, including member states of ASEAN, will want to learn from different partners and have a diverse portfolio of partnerships for greater resilience.
25. The region and China will need to work together to broaden and deepen the network of trade agreements to connect their supply chains and value chains so that both sides can be more competitive globally because the competition is not local or regional, but global. To this end, Singapore looks forward to the timely ratification and entry into force of the Regional Comprehensive Economic Partnership (RCEP).
26. Third, we need to foster deeper interoperability. We need to be able to work with one other easily, efficiently and effectively. And not just in terms of hardware, but more importantly, in our rules and regulations, as well as the use of software and data. Going forward, Digital Economy Agreements, which build on the network of Free Trade Agreements (FTAs), will be key enablers for the new generation of trade and commerce for our businesses.
Conclusion
27. Going forward, common standards in IP protection, legal standards, financial standards, will all become even more important in the interoperability of the economies in the region and China. So, the world has become more complex. Today’s complementarities may not always suggest tomorrow’s supply and value chain integration. Linear trajectories of growth in trade and integration is no longer a given.
28. Bilateral and multilateral partnerships will have to be underpinned by consistent efforts to find new areas of growth and complementarities.
29. Therein lies our collective work as a region and I am confident that ASEAN and China will be able to find common ground in our priorities – both current and new priorities, and forge a fruitful and mutually beneficial relationship going forward. Let me conclude with the following:
- The history that we have forged did not come by chance.
- The future that we are striving towards is not predestined.
- With mutual trust, and on the basis of a mutually-beneficial relationship, we are confident that the prospects for advancing ASEAN and China economic cooperation are bright.
30. Thank You.