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PM: Leaders must ensure trade tensions don't harm Sino-US ties

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PM Lee says the two must prevent trade war from 'poisoning other relationships'

The leaders of the US and China have to work out how to resolve their trade disputes and ensure ongoing tensions do not harm the broader relationship between them, Prime Minister Lee Hsien Loong said yesterday.

"The leaders of two countries need to decide what they want to do, and if it cannot be worked out, then they really want to keep it from boiling over," he said.

"They need to respond in a restrained way... and prevent it from poisoning all their other relationships. There are so many things to work together on, starting with North Korea."

Mr Lee was responding to a question at a dinner for around 400 top business and thought leaders at the Bloomberg New Economy Forum. The trade war and its impact on Sino-US ties was a top concern at earlier sessions on the forum's first day.

Tit-for-tat tariffs on hundreds of billions of dollars of each other's goods by the world's two biggest economies, ostensibly sparked by the US' trade deficit with China, have hit business sentiment.

Chinese Vice-President Wang Qishan suggested the trade war should end and denounced trade unilateralism in his keynote speech, while US strategist Henry Kissinger was "fairly optimistic" the US and China could avoid a wider conflict.

At the dinner dialogue hosted by Bloomberg News' editor-in-chief John Micklethwait, a delegate asked Mr Lee what he would advise Chinese President Xi Jinping and US President Donald Trump to do about the trade war if they were at the same table with him.

"I would be hesitant to be at such a table," Mr Lee said to laughter from the audience.

But he added: "The trade issues are genuine ones. The trade deficit is on top of Mr Trump's mind but economists will tell you it is a manifestation of other economic problems… like intellectual property."

It’s always possible. There are many reasons to bring elections forward for a party, so we’ll see. PM Lee, when asked if celebrations of the 200th year since Sir Stamford Raffles’ arrival may be a reason to bring the general election forward

These are things that have to be worked out, and both sides had come close to a deal several times but did not sign in the end, he said.

At the session, Mr Lee was also asked what the new world order would look like, with the US taking a back seat in recent years.

Mr Lee said he did not see this move as a retreat but as the US "rethinking its role", and one that applies more to the current administration.

"Up till now, America was such a dominant player in the world economy that it felt it was in its interest to provide global public goods," he said.

"The world has prospered greatly, and America with it."

They have their own responsibilities, their careers... I’m sure they’ll make contributions in their own ways. PM Lee, when asked if he would recommend “politics in the modern age” to the next generation of Lees

But with its economic fortunes shifting, the US is asking whether it should put itself first instead.

"America is entitled to take such a position, but if you work like that it will be a very different global position. There is nobody to take on the role that the US hitherto played," he said.

If this persists, it would be "a different kind of world in which not only small countries feel uncomfortable".

"I hope it doesn't go that way... And that depends on a multilateral global order, where there is some weight and authority and respect given to supranational institutions like the United Nations, the World Bank, the International Monetary Fund," he added.