BEIJING • As the world braces itself for an economic slowdown, countries cannot treat the darkening skies over the global economy simply as passing clouds.
Nations will need more than a normal, cyclical policy response, said Singapore Deputy Prime Minister Tharman Shanmugaratnam in a exclusive interview with Chinese business magazine, Caijing, published yesterday.
In the next two years, the United States is likely to experience a downturn, and so is the rest of the global economy. But the world is witnessing never-before-seen risks, said Mr Tharman, who is also Coordinating Minister for Economic and Social Policies.
"The next downturn will take place amid these longer-term risks - of economic nationalism, weakening of global value chains and growing technological rivalry," he said, ahead of his visit to China this weekend. "Uncertainty around these issues is already weakening investment and growth globally."
Singapore's response is to deal with the challenges "not defensively, but in a way that builds opportunities"; boost its capabilities by investing in research and development and helping workers and companies adapt; and continue to support an open, rules-based international order.
For instance, it has been actively pursuing partnerships around the world. It recently concluded the 11-nation Comprehensive and Progressive Agreement for Trans-Pacific Partnership, signed a new trade deal with the European Union and upgraded the China-Singapore Free Trade Agreement.
Negotiations on the mega 16-country Regional Comprehensive Economic Partnership, which includes the 10 Asean states as well as China, is also expected to be sewn up this year.
"We are in a transition in the world economy - a rebalancing and resetting of rules that will take some time to play out," said Mr Tharman, as American and Chinese trade negotiators continue to thrash out a deal after hitting each other with crippling tariffs.
The worst-case scenario would be greater conflict and fragmentation of trade and technology, but the best-case scenario is a new, cooperative world order with improved rules and norms of behaviour, he said.
The US and other developed countries will have to accept China into the club as a leading economic power, while China will have to shoulder the shared responsibilities of being a significant global market force.
Mr Tharman was also asked about the challenges that Singapore's fourth-generation leaders face, to which he singled out social cohesion as a continuing task and vital to the nation's identity and its citizens' sense of well-being.
Leaders will also need to uphold social mobility and help people adapt to their changing environment.
"The fourth-generation leaders are already actively engaged in these challenges of the times," said Mr Tharman.
"I have worked with the fourth-generation leaders for several years, and am sure that they will succeed in their mission."