TOKYO - With the world at an inflexion point on trade and security issues, Singapore's Deputy Prime Minister Teo Chee Hean on Monday (June 11) urged countries to find ways to manage their bilateral and multilateral ties, even if they do not see eye to eye with each other.

They also need to "conduct foreign relations based on mutual respect and trust", Mr Teo told the 24th Nikkei Future of Asia Conference in Tokyo.

Mr Teo, who is Coordinating Minister for National Security as well, is on the last of a three-day visit to Tokyo.

In a wide-ranging speech, he noted how trade frictions and protectionism have arisen owing to the uneven distribution of trade benefits among and within nations.

Countries are watching how the world's two biggest economies will iron out their trade differences. China has emerged as a vocal champion for free trade while the United States has turned inwards under President Donald Trump.

Mr Teo's comments came a day after Chinese President Xi Jinping sharply criticised "self-centred, short-sighted and closed-door policies".

The US is threatening heavy tariffs on imports from economies with which it has a trade deficit, including China, Canada and the European Union, which could trigger trade wars. Japan, a longstanding security ally, has also not escaped unscathed.

On Monday, Mr Teo told the forum: "Unilateral and tit-for-tat actions, if implemented, will hurt businesses and can undermine the multilateral trading system."

He added that it is this system which "ensures that all countries, big and small, can have a level playing field, and contribute to and benefit from this international network of cooperation".

If the dispute between the US and China were to escalate, their strained ties will make it harder for them to cooperate on other pressing global issues.

But Mr Teo warned against the flip side - of the two countries cooperating to set rules that benefit only themselves. "That would be just as detrimental for other countries, especially for smaller countries which will have no say in the process."

This year's Nikkei Future of Asia Conference is themed "Keeping Asia open - how to achieve prosperity and stability". Besides the Singapore DPM, other leaders at the conference include Malaysian Prime Minister Mahathir Mohamad, South Korean Deputy Prime Minister and Minister of Strategy and Finance Kim Dong Yeon, and Vietnamese Deputy Prime Minister Truong Hoa Binh.

Mr Teo and his Vietnamese counterpart championed a revised Trans-Pacific Partnership deal that they called a high-quality agreement to reduce market barriers and foster trade in a combined market worth about 14 per cent of the global gross economy.

Their comments came hours after Dr Mahathir told the forum that free trade should not be at the expense of smaller economies like Malaysia, calling for more protection of their markets.

"It is like playing golf, you need a handicap. The weakest players will get the largest handicaps so in that way, the competition will be much fairer," he said. "It is the same with trade."

Mr Teo, responding to this in a dialogue with Nikkei Asian Review editor-in-chief Sonoko Watanabe, said: "For small countries, we would not have as big a market if we were not able to take part in the global economy and sell to the world."

And amid concerns of increasing Chinese assertiveness in the South China Sea, Mr Teo said China has to "learn to work with Asean".

"China has the capacity to do many things on the military and economic front," he said. "But big powers are judged not by the power they wield but by the restraint they exercise and the respect that they show for other countries."

Meanwhile, Mr Teo also said he welcomes Japan's affirmation that the Free and Open Indo-Pacific Strategy, which promotes high-quality infrastructure and freedom of navigation in the region, is "inclusive and has Asean centrality at its core".

The policy, driven by Japan and the United States and with Australia and India on board, has widely been seen as a counter to China's increasing assertiveness.

Foreign Minister Vivian Balakrishnan has said he has harboured a "healthy scepticism" for the strategy, and said last month that Singapore would not sign it for now because it had not adequately addressed whether Asean would be central to the region's architecture.

Speaking to Singapore reporters later, Mr Teo said better ties between Japan and China will benefit Asean.

"In many ways, the two economies are complementary with each other," he said. "There is a lot of scope to work together and they should find a way to put (their historical) issues in perspective and look forward."

Both Japan's quality infrastructure initiative and China's Belt and Road Initiative are very focused on infrastructure projects in the region, Mr Teo said, adding that there are more than enough projects to go around. "They may even cooperate on some projects (which will) open markets and connectivity, (to our benefit)."

On Monday, he discussed with Japanese counterpart Taro Aso how Singapore could contribute to the success of Japan's chairmanship of the Group of 20 (G-20) leaders' summit meeting, to be held in Osaka next year.

Mr Teo, accompanied by Finance Minister Heng Swee Keat, also called on Dr Mahathir and, for more than 20 minutes, they discussed collaborative projects between Singapore and Malaysia.

"I mentioned to him that we want to proceed with projects that we have according to current agreements," Mr Teo told reporters, in a thinly veiled reference to the scrapping of a planned high-speed rail between Singapore and Kuala Lumpur.