It is in China's fundamental interests to contribute more to strengthening multilateralism "at this testing moment", when it seems to be on the brink of a trade war with the United States, said Prime Minister Lee Hsien Loong.
For if trade tensions erupt into a full-scale trade war, it could damage US-China ties and cause catastrophic consequences globally, he said yesterday at the Boao Forum for Asia, an annual meeting of top executives and leaders held on China's Hainan Island.
"China and the US have the most important bilateral relationship in the world," said Mr Lee, and a trade war would make it hard for both to cooperate in areas such as climate change, nuclear non-proliferation, regional security and denuclearisation of the Korean peninsula.
"None of these issues can be solved without the full participation of both countries. And if the disputes escalate and destabilise US-China relations, the consequences for the world could be catastrophic," he said.
In recent weeks, the US has threatened to impose tariffs on Chinese imports, in a bid to protect domestic industries and reduce the bilateral trade deficit. China responded by outlining a list of US imports that it intends to impose tariffs on.
US-China trade tensions have roiled global markets and stoked fears of an impending trade war.
TAKING THE STRATEGIC APPROACH
In international affairs, one of China's strengths has always been its ability to take a strategic, long-term view. It is in China's fundamental interests to contribute more to strengthening multilateralism, in keeping with its larger weight in the world.
PRIME MINISTER LEE HSIEN LOONG, on China's strengths.
FAR-REACHING EFFECTS OF TRADE WAR
These trade initiatives are important, but they will not compensate for the damage from a trade war, which will extend way beyond the economic loss that it will cause.
PM LEE, on multilateral initiatives such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership trade pact.
Mr Lee, who is on a five-day working visit to China and attending the forum for the first time, said he was confident that China would handle this challenge well, safeguard its interests and keep the global system open and inclusive.
"In international affairs, one of China's strengths has always been its ability to take a strategic, long-term view. It is in China's fundamental interests to contribute more to strengthening multilateralism, in keeping with its larger weight in the world," Mr Lee said at the opening of the forum.
He added that while there would always be competition between major powers, it made "all the dif-ference whether competition takes place within a framework of interdependence and generally accepted rules of the game".
"Because what is ultimately at stake is war and peace, the security and stability of the world," he said.
China's response to the US' announcement of unilateral tariffs has been careful and calibrated, but Mr Lee said the world is hoping that both parties would be able to work out an accommodation and head off further escalation before tariffs are implemented.
He said Singapore does not think imposing unilateral tariffs is the correct solution. Such measures do not abide by World Trade Organisation (WTO) rules, he said, adding that trade disputes should be resolved within the WTO framework.
Economists have pointed out that the focus on the bilateral trade imbalance between the US and China is misplaced, he said, adding that what matters was not bilateral trade balances with specific partners, but a country's overall trade balance with the world.
Mr Lee was among world leaders who delivered an impassioned defence of the global trading order at the event billed as China's answer to the World Economic Forum in Davos, Switzerland. He left for Shanghai yesterday for the last leg of his visit.
Yesterday, Mr Lee also called on China to liberalise its markets further and contribute more to the multilateral trading system, in line with its larger role in the global economy. Only if countries remained open and connected to one another, holding on to the multilateral WTO system as a basis for trade, would Asia's dynamism be sustained, he said.
It was reassuring that most Asia-Pacific countries remained committed to multilateral trade, he added, pointing to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership trade pact, and negotiations for the Regional Comprehensive Economic Partnership.
"These trade initiatives are important, but they will not compensate for the damage from a trade war, which will extend way beyond the economic loss that it will cause," said Mr Lee.