The greater danger from a US-China trade war is not just in higher tariffs or damage to trade, but the souring of Sino-US ties more broadly, Prime Minister Lee Hsien Loong is reported to have said this in a recent media despatch.
And Singapore and the region have to be prepared for this possibility, he added. Such an outcome “would make it very difficult for all the countries in Asia who are trying very hard to become friends with both, or stay friends with both”, he told Singapore reporters at the end of his five-day visit to China.
PM Lee said the numerical impact of such a conflict in terms of trade volume, tariffs, trade diversion and investment projects that become aborted or non-viable can be estimated and “probably is not enormous”.
On the other hand, the indirect consequences “in terms of the impact on the overall bilateral relationship between China and America, the difficulty they will have cooperating in many different areas where the world depends on them cooperating, and the awkwardness and the sourness in the relationship”, would have an impact on others in the region.
“In terms of the impact on the global security of the international system, I think going down this route is clearly very much the wrong thing to do,” PM Lee added. He was responding to a question on the impact a trade war would have on Singapore, in an interview with Singapore media.—Agencies