Good afternoon everyone. It is an honour to be here. I am looking forward to a robust and open discussion. Allow me to set a few framing remarks so that you understand where I am coming from. I hope most of you are familiar with Singapore. It is this tiny city state – cosmopolitan, multiracial, multilingual, in the heart of Southeast Asia. One way I explain it to New Yorkers is to imagine that upstate New York ejected Manhattan and told Manhattan “you now have to be an independent state and have your own army, navy, air force, run your own energy policy and your own food security”. Singapore always looks at the world from a position of acute vulnerability.
Let me first zoom out to Southeast Asia to give you some idea of both the growth potential of Southeast Asia and the equities which the United States has with Southeast Asia. First, population. In Southeast Asia, it is about 661 million. That is a population somewhat larger than the EU (European Union). The combined GDP (gross domestic product) is only three trillion US dollars. I say only because we expect that number to double, if not quadruple over the next two decades. If that happens, that would make ASEAN, the Association of Southeast Asian Nations, the fourth largest economy in the world. Therefore, if you believe that we are moving into a multipolar world, it means Southeast Asia will be one of those tentpoles in a multipolar world. Our population in Southeast Asia is still young. 60 percent of our people are below the age of 35 and what this means is that there is a demographic dividend to be harvested and tremendous economic potential if – and this is a big if – if things go right.
Today, ASEAN is the fifth largest economy in the world and the fourth largest goods export market for the US – that is after Canada, Mexico, and China. US trade with Southeast Asia supports more than half a million American jobs. I need to insert this line. Every time I met President Trump and even now President Biden, I remind them that there are American jobs at stake in Southeast Asia. In fact, the US has more invested in Southeast Asia than it has invested in China, India, and Japan combined. This is often a surprising thing for most people – that the US has more FDI (foreign direct investment) invested in Southeast Asia than it has invested in China, India, (and) Japan combined. The other coda to this line is that the bulk of these investments are actually in Singapore. In 2021 alone, in the depths of COVID-19, US investment flows into Southeast Asia totalled US$40 billion. That is a 41 percent year on year increase, and more than mainland China, which I think came in at about US$14 billion, or Japan at US$12 billion, and in the Netherlands at US$11 billion. In a very real sense, the future of Southeast Asia is bright. But the point I am trying to make is – look at us, Southeast Asia, on our own merits and not simply through a US versus China lens.
The second and often underappreciated point is the role that a strong and enduring US presence has played in creating the conditions that enable peace and prosperity in our part of the world. Our view is that America has been, for decades, a benign and constructive presence. Post-World War II, it was the American vision of a new world order, underwritten with American blood and treasure, that created a system based on liberal economic principles, free and open trade, and global supply chains that enabled many countries in Asia, and especially tiny city states like Singapore, to industrialise and to surf on the emerging waves of globalisation, to access critical markets, new and emerging technologies, and be part of a global network of supply chains. If you think back over especially the last five, six decades, this was a key engine for growth in my part of the world. Singapore and the other so-called “Asian Tigers” were major beneficiaries of Pax Americana. What we experienced therefore was a stable business and political environment and one in which a hard-working and disciplined people could take full advantage of. We have thousands of multinational companies (that) set up base in Southeast Asia and in Singapore in order to access this globalisation. If you think back four or five decades, this is probably before the word globalisation was popularised.
Another sub-factor to this is that there was a Cold War. During that phase which the Cold War was coldest – or you could say hottest, depending on how you want to define it – but during that time, in the 1960s and the 1970s especially, the US security presence in Asia, both in (The Republic of) Korea and in Vietnam, bought us time and space to prove that free market economics and globalisation works, and we were beneficiaries. If you cast your mind back 50 years ago, this was at a time when it was not yet obvious that Communism was dead. As luck would have it, we were on the right side and America played an appropriate role. From a Singapore perspective, let us put some numbers on this. When we were forced to go independent in 1965, our per capita GDP was about US$500. Today, it is more than US$50,000. It is a once in a lifetime leap. This was a leap which was possible because of the geostrategic economic circumstances of the last five decades. Today, there are close to 5,500 American companies in Singapore alone, with a cumulative FDI stock amounting to US$372 billion. Singapore in return is also the second largest Asian investor in the United States – we have I think investment stock of about US$62.5 billion. It flows two ways.
Having put the historical context for this, what about the future? A few years ago there were people who would like to talk about an “Asian Century” or a “Pacific Century” and they were referring to what was conceived as a period of great opportunity. Obviously, things do not always go according to plan. When you have got great opportunity, you also have great potential dangers emerging. Since my last address here (at Asia Society), the world, quite frankly, has entered a far more challenging, uncertain, and dangerous phase. What we witness today is a global order under full frontal assault. The Russian invasion of Ukraine is a full-frontal assault on the UN Charter, on a formula which has enabled generally, peace, order, security, and prosperity for decades. (With) COVID-19, and also as a result of a war in Europe, we have seen persistent supply chain disruptions. Supply chains, for those of you who are in business, (would know that) we used to pride ourselves on delivering things just in time and keeping warehouses as small and empty as possible. COVID-19 suddenly reminded everyone you needed to organise things on “just in case”, and “just in time” did not buy you resilience.
We are also witnessing a period of prolonged and record inflation. We do not think this is going to be solved in the near future. On top of that, you have got a food and energy crisis as well. This is a perfect long storm that we are confronting. Needless to say, it has caused great anxiety in the domestic politics all over the world. The complicated and difficult relationship between the United States or China adds another layer of complexity, risk, and danger to this perfect long storm.
I have been a regular visitor to Washington DC now over the past seven, eight years and even before that. I do not think I am the only observer who will conclude that sentiments within the United States against China have hardened, and have hardened considerably. Perhaps it is the emergence of a peer competitor for the first time in American history, a peer competitor capable of competing in all dimensions. This has crystallised a bipartisan conviction or anxiety that China could pose the United States’ biggest strategic threat, and if so, needs to be countered by all means available. This is also animated by differences in values, ideologies, systems of governance, and worldviews. Sometimes, it is a deeper anxiety about the future. Very often external anxieties are also reflections of internal anxieties; about the strength, cohesion, and optimism of our own domestic societies.
I have been a regular visitor to China. During the last one year, I think I have been there four times, so this is not just hearsay, but direct observation. In China, attitudes have become more assertive. As China’s strategic and economic influence has grown, so has their sense of vulnerability. There is a strong and emerging sense of nationalism in China. It is not only so-called democracies that have domestic politics. Communist regimes also have domestic politics and leaders also have to respond to the anxieties and the zeitgeist of their own societies. We have all witnessed a China that has become more muscular in defending its interests. It has taken a more active international stance in the belief that its time has come, and it wants to assume its rightful place in the world order. The key missing ingredient in this relationship, from the perspective of a dispassionate third country, is that there is a lack of strategic trust between the United States and China. Just as in human relationships, when trust is absent, there is a danger of always assuming the worst about the counterparty. The danger then, is that you end up in a potentially escalatory spiral. Actions and words by one party, reactions and counterresponses by the other party. This raises the prospect of miscalculations or mishaps. I think the ultimate focal point for this is the Taiwan Straits, which is the reddest of red lines for Beijing. (PRC State Councilor and) Foreign Minister Wang Yi was here yesterday and I am sure you got a direct download from him on how critical this area is.
The US China rivalry inevitably affects all of us, especially those of us in Asia. If you look at Southeast Asia, you will understand that it is natural for some countries to be closer to one side or the other. If you draw a spectrum with China and the US and then you line up all the countries in Asia and Southeast Asia, exactly where they stand will be a spectrum. But nobody wants to be trapped at the extreme ends of both spectrums. Nobody wants to be forced to make invidious choices. Nobody wants to become a vassal state or a cat’s paw, or a stalking horse – whichever metaphor you use. There can be no good outcome for us in Asia if our countries are forced into two camps with a line in between.
In our view, a more stable and a less tense and a constructive configuration is for both China and the US to have overlapping circles of friends. I want to emphasise this metaphor – overlapping circles of friends, rather than a hard-line or a new wall, a cold war or even greater danger ahead. It is our hope that this would be a configuration which would be more stable, durable, more peaceful, and offer more prosperity for all of us in Asia.
Amidst these geostrategic rivalries, we now find ourselves at an inflection point, because quite apart from geostrategic, we have now reached a point – and here I speak as a scientist – we have reached a point at which fundamental breakthroughs in basic research and applied science have led us to the cusp of an era where we are witnessing digital revolution, energy transformation, the onset and proliferation of Artificial Intelligence, robotics, and synthetic biology. We have seen all these elements even during COVID-19 and over the last few years. All these revolutions are interlocking and setting up a virtuous cycle which I think we will see an accelerated new Industrial Revolution, which is completely upending the means of production and will have profound political and social impacts on all our societies.
I want to end on an optimistic note. If we can avoid war and if we can continue to work together on that same shared technological stack, we have the potential to be at the era of a new golden age, and a golden age in which America, China, Europe, Asia, Southeast Asia, Africa, and Latin America, can all partake in a new age of prosperity. It will require domestic reform. It will require investments in domestic infrastructure, education, training, people, building social capital and equity. By building domestic confidence, I believe it will also help defuse some of the tensions, as far as foreign policy is concerned. I am a believer that foreign policy begins at home. I am trying to end on a note of optimism. I think the next two years are absolutely critical on a global stage. If we can get through the next two years, not lose our heads and not lose hope, and continue to invest in our own people, we in fact have the prospect of many great decades ahead of us.
Thank you, and I look forward to your questions, and a completely open and robust discussion. Thank you all very much.
Daniel Russel: As always Minister that was very thoughtful, lucid and challenging. Although I will say that if your definition of optimism begins with the phrase “if we can avoid war in the next two year,” it is a new slant on the concept of optimism.
You raised issues pertaining to the US-China strategic rivalry that are very important. I am mindful of the fact that Americans have a penchant for glossing over Southeast Asia and getting right to the China question. Your injunction that we need to look at and deal with Southeast Asia as the miraculous and tremendously important region, the dynamic region that it is, is definitely worth heeding.
I was at the table with President Obama in 2009 and 2010 when the National Security team debated the question of whether it was worth it for the President to sign the Treaty of Amity and Cooperation, to attend the ASEAN Summits, and so on. There was a real argument to be made that it was too much of a drain on the President’s time and it was an obligation. Those of us that had actually attended ASEAN meetings had certain qualms about the US president sitting through it. But he (President Obama) was absolutely unhesitating and insisting that number one, this region is phenomenally important to the United States as a Pacific power, including for some of the economic reasons that you have mentioned. Second, that it is in our interest to promote a regional architecture, a system that helps stabilise, generates prosperity, and sustains a rules-based order, so to speak; that we cannot wait for ASEAN to perfect itself. We need to get in the game, roll up our sleeves and punch in.
That is a long-winded wind up to my question. In 2012, I was there when Cambodia last hosted the ASEAN Summit and it was pretty horrible – both in terms of the degree to which ASEAN unity was fractured in an unprecedented way, but also, in practical terms, the failure for ASEAN to speak out on the critical issue of the South China Sea. You described beautifully the atmospherics of the region more broadly. But what could we hope for (and) what should we expect at the East Asia Summit where in theory Russia, the United States, and China, will be partners at the table and more broadly, the ASEAN convocation (ASEAN Summit) in November?
Minister: That is a whole set of questions. Since you have gone back to Obama, I am going to take you back to two more Administrations. I will give you an example. Singapore and the United States have a Free Trade Agreement. Its genesis was when President (Bill) Clinton played a round of golf with my then Prime Minister Goh Chok Tong at midnight in Brunei. I think it was an APEC (Asia-Pacific Economic Cooperation) meeting. There is even a scribbled handwritten note from that night – I guess they must have been in a buggy – but the Free Trade Agreement was signed by President (George W.) Bush – different party. Then it was President Obama and that was on your watch – the pivot to Asia. Then came along President Trump. I always said this line for the President – “President Trump, we have a free trade agreement with the United States, but you have a surplus against us.” The first time I said it to him he said “it cannot be”, and so I said “go and get your guys to check.” Next time I said it to him, he said you must be the only one. I said, no I do not think we are the only one. But anyway, we are not counting because for us, it is not a question of the bilateral trade balance, but the overall architecture of liberal trade and global supply chains.
You will also recall the TPP (Trans-Pacific Partnership) began as a P3 (Pacific Three Closer Economic Partnership). Three tiny states – Singapore, Chile, and New Zealand. Then it became P4 (Trans-Pacific Strategic Economic Partnership Agreement) (when) Brunei came on board. When the United States and Japan came on board, it became the TPP, which right up to today remains the most ambitious, high-level standard, multilateral free trade agreement. The United States made a strategic error in not consummating it. But this was not a partisan issue, because you will recall that even Hillary Clinton who was a candidate for President backed away from the TPP. Of course you know President Trump’s view. Our view was that was a strategic mistake, and it is not because we needed a bilateral free trade agreement with America – we already had it. We wanted America to have an icon of strategic, economic engagement across the Pacific, both with my region and with North Asia as well. It is ironic that now – first, I should say I would give full credit to Japan, who picked up the mantle after America exited the room and said never mind, the eleven of us will still get there. I was actually sceptical, but it happened anyway. Today, the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) has been ratified (and) it is coming into force. The next irony now is that you know there are others knocking on the door now, including your good friend.
There has been long standing and bipartisan engagement by the United States, economically and strategically with Asia. As I said in my presentation just now, it has been positive and mutually beneficial. I told President Trump you have got real skin in the game. You have got more invested in Southeast Asia than China, Japan, and India combined. You have a head start because if you ask all the Asian countries, some may be more explicit like we are about the benefits and benign constructive presence of America, (and) others may not be so explicit. But you have a head start, you are welcome, you are wanted. Why ever would you not take full advantage of this strategic and economic head start that you have?
I have been speaking to a multitude of administration officials, Congressmen, and Senators (and) when I meet them one on one, nobody makes a strategic argument against the TPP, but everybody tells me somewhat ruefully that it cannot be done for domestic political reasons. That is why I come back to the point I made earlier – foreign policy and trade policy begins at home. You have got to embark on the necessary reform and investment in your domestic capacity. You need to build up social and political capital and then engage and re-engage the world with confidence. That is my pitch. We will see what happens next. We at least have the latest game in town called the IPEF, the Indo Pacific Economic Framework, which very studiously avoids any mention of market access. But anyway, to the extent that it reflects American acknowledgment that there are opportunities out across the Pacific and continued engagement – that is positive. Singapore will stand fully shoulder to shoulder on this endeavour. But you need to do more – that is the message.
Daniel Russel: Minister, thank you as always for your insight, advocacy and clarity.
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Minister for Foreign Affairs Dr Vivian Balakrishnan delivering an address at Asia Society in New York on 23 September 2023
Photo credit: Ministry of Foreign Affairs Singapore
Minister for Foreign Affairs Dr Vivian Balakrishnan and Daniel Russel at an Asia Society discussion in New York on 23 September 2023
Photo credit: Ministry of Foreign Affairs Singapore