The United States and China need to accept new realities, come to terms with their global responsibilities, rebuild trust and bring stability to the world order, visiting Singapore Deputy Prime Minister Heng Swee Keat said yesterday.
He also urged Asia to redouble its efforts to strengthen the rules-based multilateral trading system that underpins its growth - as well as work with the global community to uphold this system.
"Our goal for all countries to work together can be realised only if we are part of one globalised system," he said. "This is precisely why the US and China have to work together. This will not work if the world is fragmented into two blocs, with separate systems, technologies and economies."
Mr Heng also met Japanese Prime Minister Shinzo Abe yesterday, and noted how Singapore and Japan are expanding cooperation in new areas, such as infrastructure development in third countries.
Speaking at the 25th Nikkei Future of Asia Conference, Mr Heng described the Sino-US relationship as the most important bilateral one in the world, and a key to peace and prosperity both in Asia and globally. "It is still possible for both sides to resolve their differences," he added, saying they would have to rebuild trust in their ties.
For a sustainable partnership, he said, there will have to be some give and take from both sides, with trade issues unbundled from other concerns and dealt with separately.
They must also avoid escalation by managing their domestic politics, while understanding each other's domestic constraints and red lines, he added.
The US and China have imposed tit-for-tat tariffs worth billions of dollars on each other's goods, as Washington seeks to address its trade imbalance with Beijing.
Chinese state media said this week that Beijing was ready to strike back, using its dominant position as an exporter of rare earths to the US as leverage in the trade war.
"As both the US and China harden their positions, there are fears that the global order will end up in another Cold War," Mr Heng said.
But, unlike the Cold War when the US and the Soviet Union hardly had any trade, global supply chains today are much more integrated.
"Unravelling such an integrated supply chain will be costly," he said. "Jobs will be displaced, costs will go up and the ripple effects on the global economy will be severe."
Given their complex yet highly interdependent ties, Mr Heng said, the US "has to accept that it has no better option but to work with China because trying to contain it will result in worse outcomes".
Concurrently, China needs to "accept that its increased strategic and economic weight comes with greater international responsibility", he added, and do more to convince sceptics that it will open up.
Asked about challenges facing Singapore's 4G leadership, Mr Heng cited external factors such as the chaos in the global order and the speed of technological change.
Domestically, he saw social issues like an ageing population and a more worldly population.
"Getting (different) views together and having a common view of where does Singapore go will be a very critical part of our challenge going forward," he said.
In his speech, Mr Heng said Asia has an opportunity to shape the international order in a way that will support the development and stability of the region and the world.
He pointed to mega trade deals - the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, and the Regional Comprehensive Economic Partnership (RCEP) - as being crucial to bring the region closer.
Speaking at a dinner event later, Mr Abe noted that the RCEP discussions had already gone on for "quite some time". "Let us dash towards the goal line in one intense sprint," he said, adding that the RCEP should be an ambitious and high quality deal.