Deputy Prime Minister Tharman Shanmugaratnam, who is also Coordinating Minister for Economic and Social Policies, touched on a wide range of issues, from macro-economic trends to shifting social policies in Singapore and across the world, at The Straits Times Global Outlook Forum last Friday. Below are excerpts from his comments.
IMPACT OF CHINA'S ONSHORING ON SINGAPORE
China has embarked on a fundamental shift in the nature of its economy, a change in the pace and composition of growth. That's well known - it's moving away from an investment-driven growth to an economy driven by consumption and by services more than manufacturing.
It's making progress on that journey. But what has been less noticed is an important structural shift in Chinese manufacturing itself. Remember, China is still a manufacturing powerhouse.
It has not lost, but gained, global market share in the last five years. There's a shift that's taking place within manufacturing, where China is onshoring more of its production.
We had a global supply chain that China was part of for many years. Whatever China made you would find inputs coming from a whole range of countries, and from within Asia especially.
China is now producing more of those inputs itself, and hence lengthening its own value chain. That's part of a natural evolution in the Chinese economy. They are moving from labour-intensive, low-cost production, fitting together things that have been produced abroad, towards producing more of the higher-value inputs themselves.
And that shift is having significant effects around the world, especially for Korea, Taiwan, Singapore and Japan who used to provide them with these inputs .
But there's still tremendous opportunity for trade with China at the higher end of the value chain - look at Europe and the United States, for instance.
They produce more or less the same things - America has more energy resources but otherwise they've got more or less the same structure of production - but there's tremendous trade between Europe and the US, because people look for different specialisations, and the middle class all over the world want diversity, they want distinctive products, something different from what the neighbour is using.
So that's the challenge and opportunity for us. We've got to trade with China at the higher end, have a specialisation, a skill, a novelty that adds value to them.
THE ADVANTAGE OF THE SINGAPORE BRAND
Everywhere we go in the world we find Singapore is still in demand. We are fortunate to have a very strong brand, a brand of reliability, and people trust us.
But that alone is not good enough. We need deep skills. There has to be something innovative in what we are offering.
We also have to stay plugged into networks. A few weeks ago there was a major India-Africa conference in Delhi. It was between India and the African nations. But in addition to the African nations, India invited Singapore.
We're not part of Africa or South Asia, but they invited Singapore because they see us as part of the networks of the future. That's the real advantage we have.
So stay plugged in, maximise the potential of the Trans-Pacific Partnership and our free trade agreements, help our small and medium-sized enterprises (SMEs) take advantage of our networks. That's a real priority for the future.
LEFTWARD SHIFT IN POLICIES BUT KEY VALUES REMAIN
There are lessons from both the right and the left that are important to sift. Our policies have shifted to the left, but the values that underpin our policies are sometimes associated with conservatives. Taking responsibility for your family, being responsible to keep a job and keep improving on your job, being socially responsible.
These are things which the traditional left in Europe and elsewhere has tended to move away from over the decades, although they started with it. The original social democratic model revolved around those values. The values of personal and family responsibility have to underpin all our efforts.
The State is taking more responsibility, there's more collective responsibility, but it can only work and it can only lead to a dynamic society if it goes hand in hand with personal and family responsibility. And we should not be at all shy to talk about these values. It's what underpins a better society.