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Live from Singapore: Keeping Globalization Alive Amid 'Geopolitical Climate Change' · Trumponomics

0:02
Speaker 1: Bloomberg Audio Studios, podcasts, radio news. China is not able
0:09
Speaker 1: or winning to replace the US as the underwriter of globalization.
0:14
Speaker 1: So we are to quote my Prime Minister in US
0:17
Speaker 1: interacting them a state of messy transition. Cromwell world in
0:21
Speaker 1: which there was an underwriter an enforcer, and then underwriter
0:26
Speaker 1: and enforcer has now decided to become disruptor in chief
0:30
Speaker 1: for domestic political reasons.
0:41
Speaker 2: I'm Stephanie Flanders, head of Government and Economics at Bloomberg,
0:44
Speaker 2: and this is Trumpnomics, the podcast that looks at the
0:47
Speaker 2: economic world of Donald Trump, how he's already shaped the
0:50
Speaker 2: global economy and modern earth is going to happen next
0:57
Speaker 2: This week, I'm sharing a conversation with Singapore's top diplomat,
1:01
Speaker 2: Vivian Balakrishnan. If we look back at the global economy
1:04
Speaker 2: in twenty twenty five, much of what we might have
1:07
Speaker 2: expected from a second Trump term has happened. And then
1:11
Speaker 2: some a rupture in the Western Alliance, are withdrawal or
1:14
Speaker 2: stepping back from multilateral decision making fora like the G
1:18
Speaker 2: twenty and the cop A more aggressive stance towards enemies
1:21
Speaker 2: in America's backyard. It's all there, but one thing we
1:25
Speaker 2: haven't seen is a global trade war. Though the US,
1:29
Speaker 2: we know, has imposed hefty tariffs on all of its
1:31
Speaker 2: trading partners, those countries, with the notable exception of China,
1:35
Speaker 2: have not fought back. Instead, in effect, they've said, we
1:39
Speaker 2: don't like this, but we're darn if we're going to
1:40
Speaker 2: make it worse. The US might wish to raise high
1:43
Speaker 2: tariff walls around its economy, rest of US are going
1:46
Speaker 2: to keep on opening up and if possible, do even
1:49
Speaker 2: more trade amongst ourselves. That is a big good news
1:52
Speaker 2: story from this year that we shouldn't forget, and I
1:55
Speaker 2: was reminded of again last week at the Bloomberg New
1:58
Speaker 2: Economy Forum in Singapore, where you sit looking out at
2:02
Speaker 2: the mass of container ships in the Singapore Strait. About
2:07
Speaker 2: twenty five percent or so of global exports and imports
2:10
Speaker 2: passes through that crucial shipping corridor, giving small but super
2:14
Speaker 2: successful Singapore a very large stake in sustaining a global
2:18
Speaker 2: trading system and incidentally a bird's eye view of everything
2:22
Speaker 2: happening in Asia. This country also has a knack of
2:27
Speaker 2: producing rather aerodyite public servants, so at the start of
2:30
Speaker 2: the forum on November nineteenth, I sat down with one
2:33
Speaker 2: of them, Foreign Minister Vivian Balakrishnan, to talk about the
2:37
Speaker 2: meaning of the recent trade deal between the US and China,
2:40
Speaker 2: what the shifting global landscape means for Asia. He was
2:44
Speaker 2: at both the Asian and APEX summits where some of
2:47
Speaker 2: those deals were done, and I began by asking him
2:50
Speaker 2: whether the new trade partnerships that Singapore and others were
2:53
Speaker 2: hoping to build without the US could really reshape the
2:56
Speaker 2: future of global trade.
3:03
Speaker 1: Well, there's a quote attributed to Ernest Hemingway, how did
3:07
Speaker 1: you go bankrupt? It says two ways, gradually and then suddenly.
3:12
Speaker 1: So hold that thought in mind. This year has been
3:15
Speaker 1: the year of sudden changes, but actually the gradual changes.
3:21
Speaker 1: The pressure has been building up for a long time.
3:25
Speaker 1: The first point I wanted to leave with you is
3:27
Speaker 1: the role of the United States for the last eight decades. Actually,
3:32
Speaker 1: it is historically unprecedented. The ultimate winner of the Second
3:36
Speaker 1: World War, forty percent of global GDP, that was his
3:40
Speaker 1: share of global GDP, decided, instead of conquering and eliminating
3:45
Speaker 1: the Vanquish, rebuilt Germany Europe through the Marshall Plan, and
3:50
Speaker 1: it set really a rules based globalization with economic integration
3:57
Speaker 1: at the core. And this is highly, highly unusual and unprecedented.
4:03
Speaker 1: So that's the first point. It is about the US.
4:07
Speaker 1: Second point is that actually the pressures on the US
4:13
Speaker 1: to give up on this has been building up for
4:15
Speaker 1: a long time. And what I mean, if you think
4:17
Speaker 1: about it, what the US did for eight decades was
4:20
Speaker 1: to provide first the market, second technology, third capital, and
4:29
Speaker 1: rules based economic integration. The first beneficiary of it, apart
4:33
Speaker 1: from Europe, was Japan, and then you had the Asian
4:37
Speaker 1: tigers Hong Kong career to Singapore and then the rest
4:41
Speaker 1: of Southeast Asia. But the real winner of rules based
4:46
Speaker 1: free trade has actually been China. And the US is
4:50
Speaker 1: only two hundred and forty nine years. It has never
4:54
Speaker 1: met a peer competitor with the scale, the ability, and
4:59
Speaker 1: the willingness to reorder the world in a way that's
5:03
Speaker 1: favorable to it.
5:04
Speaker 3: But the point is that China, if you.
5:09
Speaker 1: Look at this per capita GDP, it's still a middle
5:12
Speaker 1: income country. And China is not able or willing to
5:16
Speaker 1: replace the US as the underwriter of globalization. So we are,
5:22
Speaker 1: to quote my Prime Minister, in an interregnum, a state
5:25
Speaker 1: of messy transition from a world in which there was
5:29
Speaker 1: an underwriter an enforcer, and that underwriter and enforcer has
5:34
Speaker 1: now decided to become disruptor in chief for domestic political
5:38
Speaker 1: reasons because after eight decades of providing capital, technology, and markets,
5:44
Speaker 1: what the middle class in America has seen is the
5:47
Speaker 1: industrialization russ belts, hopelessness and middle income stagnation. And guess
5:55
Speaker 1: what elections are local. So it is a completely legitimate
6:01
Speaker 1: question for the American water to say, wait a minute,
6:04
Speaker 1: why should we underwrite in blood and treasure, this system
6:07
Speaker 1: which seems to have profited the rest of the world
6:11
Speaker 1: and especially a big peer competitor, And I think we
6:16
Speaker 1: need to pull back. So you see my point about
6:19
Speaker 1: gradually and then suddenly you know it's like an iceberg
6:23
Speaker 1: or a continental ice shelf falling. But actually the climate
6:28
Speaker 1: warming was predated that. So my point is what we're
6:33
Speaker 1: witnessing today is not just a change of whether this
6:36
Speaker 1: is real climate change, dual political climate change.
6:41
Speaker 3: So that's contact setting.
6:43
Speaker 2: I think it's historically unprecedented also to have a single
6:48
Speaker 2: global superpower almost voluntarily step back from a lot of
6:53
Speaker 2: its obligations, not be forced to do so, not lose
6:55
Speaker 2: a war, but just decide I don't want to do
6:58
Speaker 2: this anymore.
6:58
Speaker 1: Yes, an unusual to have such a benige hegemon in
7:02
Speaker 1: the first place, and for us now to say, where.
7:05
Speaker 3: Did that hagamon go?
7:07
Speaker 1: I'm saying, if you take a longer view of history
7:12
Speaker 1: in jee politics, the point is this was a unique period.
7:15
Speaker 1: I've tried to go back in it. I can't find
7:17
Speaker 1: another period in history when we had such a benine
7:20
Speaker 1: hegamon when you just.
7:22
Speaker 2: Think back even just a few years ago, and then
7:24
Speaker 2: we would have been on this stage talking about decoupling. Yes,
7:27
Speaker 2: and that may be the climactic change, to distinguish from
7:30
Speaker 2: the change in the weather, as you've said. But the
7:33
Speaker 2: Biden administration, I think for many of it, of the
7:36
Speaker 2: US allies, it felt that the US was asking countries
7:40
Speaker 2: to choose between the US and China, and that was
7:43
Speaker 2: obviously challenging. Nowhere more than here, President Trump has had
7:49
Speaker 2: a much many people would say, less consistent, certainly more freewheeling,
7:55
Speaker 2: unilateralist approach. It feels a little bit like the world
7:59
Speaker 2: is less divided between US and China now and more
8:01
Speaker 2: the US and the rest of the world just left
8:04
Speaker 2: in a mess. Well, is that easier or harder for well.
8:07
Speaker 1: First of all, the American ambassador is here, so I'm
8:10
Speaker 1: not here to be an apologist. But I would say
8:14
Speaker 1: President Trump as a person in fact, has been uniquely
8:20
Speaker 1: consistent for decades.
8:22
Speaker 3: What do I mean?
8:23
Speaker 1: Watch the interview with Operah Winfrey back in nineteen eighty eight,
8:26
Speaker 1: his views on war, anti war, his views on free trade.
8:31
Speaker 1: It's an avenue for America to be taken advantage of
8:34
Speaker 1: his views on business in a main street real estate
8:38
Speaker 1: way as opposed to Wall Street and financial engineering.
8:43
Speaker 3: His views on immigration actually have been remarkedably.
8:46
Speaker 1: Consistent, and I think people don't give enough marks for
8:49
Speaker 1: that point. So he is consistent. It's just that his
8:53
Speaker 1: methodology his presentation is somewhat novel, and people get react
8:58
Speaker 1: to that. But my point is American policy and the
9:01
Speaker 1: President Trump in fact is reflecting long held, deep convictions.
9:06
Speaker 2: I think you are right. I guess the exception to that,
9:09
Speaker 2: and I'm interested in whether you read it the same
9:11
Speaker 2: way you've been at the recent meetings with your Prime
9:14
Speaker 2: Minister in Malaysia and Korea, where we did see this
9:19
Speaker 2: deals between the US and China. Yes, but it will
9:22
Speaker 2: not have been lost on many of the people around
9:24
Speaker 2: the table. That China was ending up with a relatively
9:26
Speaker 2: better position than many of the other countries in the
9:30
Speaker 2: region who had thought that they were going to be
9:33
Speaker 2: an alternative to China. For US manufacturers, well, that feels
9:36
Speaker 2: a little inconsistent with wanting to wean American industry off
9:41
Speaker 2: Chinese manufacers.
9:42
Speaker 1: Well, again, I would distinguish between strategic and tactical. I
9:47
Speaker 1: think what we've witnessed so far is the tactical pause.
9:50
Speaker 1: The fundamental problem in the US and China is an
9:54
Speaker 1: almost complete lack of strategic trust, and that means each
9:59
Speaker 1: side has to assume the worst of each other, and
10:02
Speaker 1: even if you're taking precautions, it's viewed as escalatory. Both
10:07
Speaker 1: sides have identified pain points, and I think what you've
10:10
Speaker 1: seen so far is not a strategic realignment or southern
10:15
Speaker 1: dawn of strategic trust, is that both sides have decided
10:18
Speaker 1: they need time, they need a tactical pause whilst you
10:24
Speaker 1: get on with the real business. And the point about
10:26
Speaker 1: decoupling is worth unpacking because what we are witnessing the
10:30
Speaker 1: world right now is a couple of phenomena. Number One,
10:34
Speaker 1: you've witnessed the weaponization of everything, weaponization of the dollar,
10:38
Speaker 1: weaponization of finance, weaponization of critical minerals, global supply choins.
10:45
Speaker 1: Interdependency used to be a good thing. Now it's a vulnerability.
10:50
Speaker 1: But my point about weaponization of everything, you know, Newton's
10:54
Speaker 1: third law applies in diplomacy too. For every action, there's
10:57
Speaker 1: an equal and opposite reaction. So the weaponization where everything
11:02
Speaker 1: has led to an erosion of trust, has led to
11:06
Speaker 1: a need to assume the worst and to prepare for it.
11:10
Speaker 1: And in the absence of trust, it's very hard to
11:13
Speaker 1: actually have strategic alignments. So that's first part. What you're
11:16
Speaker 1: witnessing now is a tactical pause. The strategic problem remains.
11:21
Speaker 1: The next aspect of what's going on now is the
11:25
Speaker 1: fracturing of supply chains. And it's not an ideological point,
11:29
Speaker 1: but I think especially during COVID, you found it.
11:32
Speaker 3: Even simple things like making.
11:34
Speaker 1: A mask, which it's not rocket science, but the essential
11:37
Speaker 1: components were not within reach and everyone was panicking and
11:42
Speaker 1: you didn't have access to it. So the fracturing of
11:44
Speaker 1: supply chains in the name of national security and in
11:48
Speaker 1: search of resilience actually means a world which hitherto has
11:53
Speaker 1: been based on efficiency, is now building supply chains on
11:58
Speaker 1: a basis of near ding on shoring French showing. Economically,
12:04
Speaker 1: what that must mean is some inflation because you're no
12:08
Speaker 1: longer choosing the cheapest and the best, most efficient, You're
12:12
Speaker 1: now having other considerations. So watch that a bottom inflation.
12:16
Speaker 1: The third point is the global comments. I've been involved
12:21
Speaker 1: in this game long enough, so I'll give you an example,
12:24
Speaker 1: the Paris Climate Change Agreement. The only reason that got
12:27
Speaker 1: done is because America and China are on the same side,
12:30
Speaker 1: and we're able to drag the rest of us an
12:33
Speaker 1: imperfect but important agreement. Today if the two main players
12:40
Speaker 1: are not in the same room, and it goes further
12:43
Speaker 1: than that.
12:44
Speaker 3: In fact, it's not just a.
12:46
Speaker 1: Matter of picking out your marbles and leaving the game,
12:49
Speaker 1: but you're actually disrupting the game. And my worry is
12:54
Speaker 1: that we're going to be unable to deal with the
12:56
Speaker 1: global comments. It means climate change, pandemic, the challenges from AI.
13:02
Speaker 1: We won't be able to respond adequately to it because
13:06
Speaker 1: the two key players either are disrupting actively or are
13:13
Speaker 1: spoiling for a fight and are certainly not willing to
13:16
Speaker 1: restrain themselves with multilateral rules imposed by lil Putin countries
13:23
Speaker 1: begins medium and small elsewhere.
13:27
Speaker 3: I hope that's not too depressing.
13:41
Speaker 2: It just seems a muddier picture than the decoupling team US.
13:46
Speaker 3: It's resty.
13:47
Speaker 2: But as your concern, the long term trend, yes, I
13:51
Speaker 2: mean someone has likened it to a couple saying we're
13:54
Speaker 2: going to divorce in ten years, but we have to
13:56
Speaker 2: live together before then. You still need. Long term trend
13:59
Speaker 2: is dec coupling between the US and China.
14:01
Speaker 1: I think without the strategic trusts, the logic for decoupling,
14:08
Speaker 1: at least partially in the name of national security and
14:13
Speaker 1: anxiety over competitiveness, will continue to play out.
14:18
Speaker 3: And that's that's what we're witnessing.
14:20
Speaker 1: But if I can come back to where you started
14:22
Speaker 1: with a piece of good news, I said, why hasn't
14:25
Speaker 1: the rest of the world retaliated? I think a couple
14:28
Speaker 1: of reasons. Number One, they're a far bigger elephant or
14:31
Speaker 1: ego than the rest of us. So what's the point
14:35
Speaker 1: of retaliating when in fract the little guy will be
14:39
Speaker 1: the ultimate loser. So that's the first thing. Second, and
14:43
Speaker 1: I'm coming to your good news. If you leave aside
14:47
Speaker 1: the two big powers, and if you think if you
14:50
Speaker 1: open a World Atlas and draw a diagonal Europe, the
14:56
Speaker 1: Middle East, South Asia, Southeast Asia, Australi in New Zealand,
15:00
Speaker 1: and then you draw two spokes, one to Northeast Asia
15:03
Speaker 1: particular Japan Career, and another spoke southwest through Africa and
15:10
Speaker 1: South America.
15:12
Speaker 3: Guess what.
15:13
Speaker 1: In fact, there is still a majority of countries and
15:17
Speaker 1: even I would say the majority of global GDP, that
15:21
Speaker 1: still wants to operate on supply chain efficiencies, on economic integration,
15:26
Speaker 1: on rules based globalization. The only thing is the enforcer
15:31
Speaker 1: in chief is no longer there and there is a
15:34
Speaker 1: need therefore to assemble or coalition of the willing. So
15:36
Speaker 1: what you're watching now, all that's scurrying around by medium
15:40
Speaker 1: and small economies is to keep globalization alive, reform what
15:47
Speaker 1: needs to be reformed, and there's a lot that needs reform,
15:50
Speaker 1: but to work together in a more collegiate way, knowing
15:53
Speaker 1: full well that the underwriter, the enforcer, is not going
15:57
Speaker 1: to be doing the heavy lifting. So that's where I
16:00
Speaker 1: think there is a glimmer of hope. And that's why
16:02
Speaker 1: you know, my Prime Minister and I've been discovering around
16:06
Speaker 1: to regional and international conferences and the good news I
16:10
Speaker 1: agree with you. The majority people in fact want some order,
16:15
Speaker 1: some stability, and some benefits, economic benefits from working together,
16:21
Speaker 1: from inter operating, And what we are hoping ultimately is
16:25
Speaker 1: that when things settle down between the two big bodies,
16:28
Speaker 1: they will then rediscover the benefits of globalization.
16:34
Speaker 2: One of the initiatives that you had in the summer
16:36
Speaker 2: was with the Gulf and the GCC. Do you see
16:39
Speaker 2: that moving forward?
16:41
Speaker 1: Well, if you look earlier this year, we had that
16:43
Speaker 1: when we had an RC and some that we included,
16:45
Speaker 1: the GCC and China in Singapore were members of both
16:49
Speaker 1: the CPTPP and our CP which are big mega free
16:54
Speaker 1: trade deals. We're trying to convince the European Union, who
16:59
Speaker 1: is also a flexy pro trade pro rules.
17:04
Speaker 3: Are they going to join? No, I think that's a
17:06
Speaker 3: bridge too far.
17:07
Speaker 1: But can we get a partnership between the European Union
17:12
Speaker 1: and the CPTPP, especially a CPTPP which is.
17:15
Speaker 2: Expanding, You've got to think we need a bit.
17:18
Speaker 3: I know, I know, In fact, I.
17:21
Speaker 2: Think that's why everyone talks about it, honestly.
17:23
Speaker 3: I know.
17:24
Speaker 1: But if it's strip aside the labels and the names,
17:27
Speaker 1: I mean, the point is, is there benefit from globalization,
17:32
Speaker 1: from efficiency, from interoperability, from standards, from peaceful resolution of disputes,
17:39
Speaker 1: including trade disputes. The answer is unequivocally yes. But we
17:45
Speaker 1: need to do it now and everyone needs to chip in.
17:48
Speaker 1: So I think the EU is a natural partner with
17:52
Speaker 1: the CPTP. So think of the EU and the Pacific.
17:55
Speaker 1: Can we construct something that cuts a diagonal across go
18:00
Speaker 1: and it's Africa keen on this. I think they are
18:04
Speaker 1: South America. I mean, you may be surprised, even little Singapore.
18:07
Speaker 1: We've signed free trade deals with Mercasol, which is Argentina, Brazil, Ecuador, Paraguay, Uruguay.
18:14
Speaker 1: We've even signed a free trade agreement with the Pacific
18:17
Speaker 1: Alliance Mexico, Colombia, Chile. So the point is you'll be surprised.
18:23
Speaker 1: The appetite for economic integration remains, and that's what Singapore
18:28
Speaker 1: is working now.
18:28
Speaker 3: Of course, I'll tell you, of course we are biased.
18:31
Speaker 1: This is Manhattan without upstate New York, or this is
18:35
Speaker 1: one fifth of Rhode Island without continental United States, or
18:39
Speaker 1: if you want another uncomfortable analogy, Singapore is just twice
18:43
Speaker 1: the size of Gaza, but with three times the population.
18:47
Speaker 1: So we're a tiny place in which our trade volume
18:51
Speaker 1: is three times our GDP. So I hope you understand
18:54
Speaker 1: when we promote free trade, it's lifeblood. It's not a
18:58
Speaker 1: negotiating point, right, And when we say rules are better
19:04
Speaker 1: than the alternative, because the alternative is right, it might
19:08
Speaker 1: be it's beautiful and small. It's irrelevant. So I will
19:12
Speaker 1: confess this is a self interested argument.
19:15
Speaker 2: But you've talked about importance of rules, but also a
19:18
Speaker 2: country is working together.
19:20
Speaker 3: Yes, absolutely, not enforced.
19:21
Speaker 2: Should the Southeast Asian economies, even the Asian countries have
19:25
Speaker 2: worked together more in negotiating these trade deals with the US.
19:28
Speaker 2: You talk, No, I don't. I don't buy nactual arm
19:30
Speaker 2: wrestling you describe.
19:31
Speaker 1: Yes, No, I don't think that was necessary, not certainly,
19:35
Speaker 1: not at this stage. I mean, if you look at
19:37
Speaker 1: Asian as a horse, you know the terris range from
19:41
Speaker 1: ten percent, nineteen percent, maybe twenty percent, and those.
19:45
Speaker 3: Numbers keep changing.
19:47
Speaker 1: Anyway, my point is, don't overreact to the headline of
19:53
Speaker 1: after Day.
19:54
Speaker 3: Understand what's going on.
19:56
Speaker 1: So if you now bring your zoom lens to Arcian,
20:00
Speaker 1: have we systematically brought down our trade barriers non tariff barriers?
20:05
Speaker 3: Is RCN fulfilling its mission?
20:07
Speaker 1: Of becoming a single production zone, a single investment zone.
20:11
Speaker 1: Has there been economic growth in URSA? What are the
20:15
Speaker 1: prospects of RCN in the next two decades. We think
20:17
Speaker 1: we can double our combined GDP. If you add up
20:20
Speaker 1: the combined GDP of RCN, which by the way, has
20:23
Speaker 1: a population slightly larger than the EU, we're about number five.
20:28
Speaker 3: And because half of population is.
20:30
Speaker 1: Below the age of thirty five and our middle class
20:34
Speaker 1: is growing, the long term prospects are right. So long
20:38
Speaker 1: as we don't overreact, we don't do stuff that actually
20:42
Speaker 1: boomer ranks back on us. And we just look at
20:44
Speaker 1: what we did this year. We upgraded the RCAN agreement
20:48
Speaker 1: on trading goods within r CM, we upgraded the rc
20:52
Speaker 1: and China Free Trade Agreement, and we're still looking at
20:55
Speaker 1: building more more bridges across the world. So my point
20:59
Speaker 1: is that in fact, Southeast Asia is a zone of
21:03
Speaker 1: hope and growth.
21:05
Speaker 3: The key thing is to focus on.
21:09
Speaker 1: The long term. And what does long term mean? It
21:11
Speaker 1: means technology. Bearing in mind that we've got three technological
21:15
Speaker 1: revolutions going on in real time simultaneously, AI, biotech, renewable energy,
21:22
Speaker 1: and we're focusing on building up the infrastructure for that.
21:26
Speaker 1: With focusing on educating a workforce, work creaty for that
21:30
Speaker 1: kind of work, the world of AI and robotics, and
21:33
Speaker 1: we're focusing on integrating, we can still increase our intrascient
21:37
Speaker 1: trades significantly. And what about Asian Africa, Asian South America.
21:43
Speaker 1: You know, it's some people call it South South. I
21:45
Speaker 1: don't really like term, but my point is there is
21:48
Speaker 1: still a majority in favor of this. I would also
21:52
Speaker 1: point out the CPTPP began as four tiny states Singapore, Bruna,
22:00
Speaker 1: New Zealand and Chile, and it only became TPP when
22:05
Speaker 1: America and Japan came in. Now we knew by the
22:10
Speaker 1: time Hillary Clinton had to withdraw from her support from
22:15
Speaker 1: the TPP, which in fact she had a lot to
22:17
Speaker 1: do with starting, that the cause of free trade was
22:21
Speaker 1: in political problem. And I think all of us in
22:25
Speaker 1: this room, who I would say are probably instinctive free traders,
22:29
Speaker 1: need to realize that we didn't make the political case
22:32
Speaker 1: for it. And you have to convince your local electorate
22:39
Speaker 1: the jobs and wages and opportunity come from free trade. Otherwise,
22:45
Speaker 1: if you don't understand the political reality that for every
22:50
Speaker 1: free trade agreement, they are winners and losers. You need
22:53
Speaker 1: to put seat belts on. You need to have compensatory mechanisms.
22:57
Speaker 1: And whilst you don't expect governments to choose winners and
23:01
Speaker 1: losers at the enterprise level, but governments do need to
23:06
Speaker 1: be activists infrastructure, education, pro enterprise regulatory environments.
23:13
Speaker 3: You do need an active government.
23:16
Speaker 1: But what you don't want is completely state directed capitalism
23:21
Speaker 1: where you pick winners and lois. So we think that's
23:24
Speaker 1: ultimately a dead end. So anyway, my point is, watch
23:28
Speaker 1: this space. That's why there's still buzz in this part
23:31
Speaker 1: of the world.
23:32
Speaker 2: We're going to run out of time. So I want
23:33
Speaker 2: to just quickly ask you I started talking about the US.
23:36
Speaker 2: I mean you have said obviously trade is the lifeblood
23:39
Speaker 2: of Singapore, and you're absolutely at the center of looking this.
23:42
Speaker 2: The one country that despite all these tariffs and trade
23:45
Speaker 2: wars by the US, the one country that has managed
23:48
Speaker 2: to increase its export growth this year's China. See that
23:52
Speaker 2: country in many ways doubling down on a focus on manufacturing,
23:58
Speaker 2: on export led growth, when many economists might have said
24:02
Speaker 2: long term they have to be on a different path.
24:05
Speaker 2: How destabilizing is that for this region, especially now they
24:08
Speaker 2: have a slightly more well.
24:10
Speaker 1: I think what you're referring to you're being too delicate.
24:13
Speaker 1: You're referring to over capacity. Actually, the world has had
24:17
Speaker 1: unsustainable imbalances for some time. If you outsource all manufacturing
24:22
Speaker 1: to China, you outsource all energy to Russia, and you
24:27
Speaker 1: outsource security to America, I'm referring to the EU.
24:33
Speaker 3: That's not a sustainable model.
24:35
Speaker 1: And if the EU wants sort of strategic autonomy or independence,
24:39
Speaker 1: it needs to get a grip on manufacturing, on its
24:42
Speaker 1: industrial capacity, on its defense, and on its energy policies.
24:47
Speaker 1: And I'm just giving you one example. In the case
24:52
Speaker 1: of China, it's worth also reflecting because China became the
24:56
Speaker 1: manufacturing center well and enjoying economies of skin. And by
25:00
Speaker 1: the way, I must say, Chinese workers happened to be
25:05
Speaker 1: really hard working and efficient. I don't think you can
25:08
Speaker 1: follow China for that. But a world in which all
25:12
Speaker 1: manufacturing is accumulating on one half, trade surpluses are accumulating there,
25:18
Speaker 1: but those trade surplus are being recycled it used to
25:20
Speaker 1: be recycled.
25:21
Speaker 3: Into T bills.
25:22
Speaker 1: What it meant is, for a while the Western consumer
25:26
Speaker 1: enjoy low inflation, low interest rates, high quality.
25:30
Speaker 3: Goods at affordable rates.
25:32
Speaker 1: But actually we're consuming beyond what they were producing, and
25:36
Speaker 1: we should not be surprised that this system based on
25:40
Speaker 1: the imbalance was not sustainable. Now, if you imagine that
25:45
Speaker 1: Americas shuts its market to the productive capacity of China
25:50
Speaker 1: and the EU also follows suit I mean, and think
25:53
Speaker 1: of automotives as an example.
25:56
Speaker 3: Then the question will be will China be able.
25:59
Speaker 1: To expand is domestic consumption to match its capacity or
26:04
Speaker 1: will it still try to export its way? And if
26:08
Speaker 1: it does, where will it export to?
26:11
Speaker 2: But that is what they do, right.
26:13
Speaker 3: No, I think.
26:14
Speaker 1: But I'm saying, let's, without being pejorative or making value judgments,
26:19
Speaker 1: just ask yourself, do you need domestic changes to the
26:24
Speaker 1: economic structure of China?
26:25
Speaker 3: I think we do.
26:27
Speaker 1: What does Southeast Asia, Africa and South America?
26:32
Speaker 3: One do we need infrastructure? We do?
26:34
Speaker 1: Is the productive capacity of China for the development of
26:38
Speaker 1: that infrastructure, particularly green energy, AI and even biotech, which,
26:45
Speaker 1: by the way, speaking as a doctor, the Chinese are
26:47
Speaker 1: no slouches in that area too. So what I'm saying
26:51
Speaker 1: is watch this space. I am sure adjustments will occur
26:55
Speaker 1: both domestically and across borders. And across loads, and the
27:00
Speaker 1: opportunity will be to try to catch these waves, catch
27:05
Speaker 1: these new tides and wins so that we maximize opportunities
27:09
Speaker 1: for the rest of us. So, don't you know, I'll
27:12
Speaker 1: come back to the hopeful note in which you started.
27:14
Speaker 1: Not all of us have lost our heads and reacted
27:18
Speaker 1: in panic or even acted on sense of retribution. But
27:23
Speaker 1: we've tried to take a longer term view of the
27:26
Speaker 1: imbalances and of the trends, and to seek opportunities in
27:31
Speaker 1: these interact names.
27:34
Speaker 3: Well, I think that's the basis of ourbitrage.
27:35
Speaker 2: For sixty years, things been fairly good at now.
27:37
Speaker 1: Now, but sixty years is you know, in Asia, sixty
27:40
Speaker 1: years it's far too early to tell, So we never
27:43
Speaker 1: take our survival for granted.
27:46
Speaker 2: Documentarish thank you so much for joining us and for
27:49
Speaker 2: starting ourself on a hopeful footing.
27:51
Speaker 1: I hope, so, so don't lose your head, you know,
27:55
Speaker 1: understand what's going on.
27:56
Speaker 3: Look for opportunities. There are opportunities.
28:09
Speaker 2: Thanks for listening to Trumpnomics from Bloomberg. It was hosted
28:11
Speaker 2: by me Stephanie Flanders, and I was joined by Singapore's
28:14
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