Slower growth if trade systems fragment: Chan Chun Sing
More integration or fragmentation - firms must adapt: Chan Chun Sing
Once the global economic, technological and capital market systems start getting fragmented, the world will be in for lower growth, said Minister for Trade and Industry Chan Chun Sing yesterday.
He was answering a question about the impact of potential United States restrictions on fund flows to China, following reports last Friday that Washington is considering measures such as delisting Chinese companies from US stock exchanges.
This comes more than a week or so before China and the US, who make up about 40 per cent of the global gross domestic product, enter another round of high-level trade talks.
But Mr Chan added that whether capital markets or technological standards can be easily decoupled is not a straightforward issue.
"The interdependencies between different economies, between different companies and countries are much deeper than what many of us will give it credit for," he told a day-long conference on the impact of digitalisation trends on businesses.
The situation today could lead to two scenarios, and companies must be able to operate in either, he said.
One scenario involves greater global integration, with people realising how much more interdependent parties are, and the other sees the world fragmenting. The question is how firms can learn to operate across different economic blocs.
Whether the US and China come to any agreement, the world has woken up to the realisation that things will not go back to what they were before, said Mr Chan at the Digitise Asean conference organised by the Singapore Business Federation and Asean Business Advisory Council (Asean-BAC).
"Everybody is taking the need to de-risk their operations very seriously," he said.
He maintains that the world is at a crossroads. Governments and businesses have to decide if it will go on a higher growth trajectory with greater integration, or become fragmented digitally, financially and as a global economy.
Governments are responsible for fostering global digital integration, said Mr Chan.
In a speech, Asean-BAC Singapore chairman Robert Yap added that governments also play a key role in providing conducive environments for the adoption of advanced technologies.
Mr Chan added that Singapore is working with like-minded countries and companies on new international approaches to support the digital economy - in facilitating data flows, setting standards and helping businesses seize opportunities.