National Day Rally 2019: Singapore's challenges in navigating US-China turbulence

PHOTO: ST FILE

Fleshing out a theme of his speech in Mandarin at the National Day Rally yesterday, Prime Minister Lee Hsien Loong discusses the impact of US-China tensions on Singapore.

BICENTENNIAL AND THE FORGING OF A SINGAPORE IDENTITY

We are commemorating Singapore's Bicentennial. The year 1819 was a turning point in our history. That year, Raffles landed in Singapore and established a free port here. This attracted migrants from South-east Asia, India and China, who came to seek their fortunes.

Many Chinese came from Guangdong, Chaoshan and Fujian. Some came from nearer places like Penang, Malacca and the Riau Islands.

Many started as labourers - "coolies" - barely able to make ends meet. They strove hard to eke out a living. Some started small businesses. The more educated ones took up professions like teaching and journalism. Others developed plantations, set up banks or went into trading. Ultimately, many settled down and built their lives here.

They were our "Founding Generation" who contributed much to Singapore. The leaders among them set up clan and trade associations to help their fellow countrymen integrate and establish themselves. These "towkays" rallied the Chinese community to build hospitals, schools and temples.

Most of our forefathers maintained close links with their motherland. They arrived here in Nanyang as sojourners, intending to return to China one day. They still saw themselves as people of China and were passionate about their homeland. Many participated in the political movements and revolutions in China, and some gave their lives.

Over 100 years ago, Sun Yat Sen set up the Tongmenghui (United League of China, the predecessor of the Kuomintang) to overthrow China's Qing Dynasty. Tongmenghui's South-east Asian headquarters was established in Singapore, at Wanqingyuan (today's Sun Yat Sen Nanyang Memorial Hall), where the revolutionaries planned several uprisings in China.

In the 1930s, after Japan invaded China, the Singapore Chinese were once again roused to arms. An eminent community leader, Tan Kah Kee, led the efforts to raise funds and organise volunteers to support China. These included the Nanqiao Jigong (Nanyang Transport Volunteers), who returned to China to fight the Japanese. This was one reason the Japanese carried out the Sook Ching Operation here after they captured Singapore in World War II, massacring tens of thousands of Chinese people here.

After World War II, the Chinese Communist Party defeated the Kuomintang in the civil war and founded the People's Republic of China (PRC) in 1949. This made a deep impression on many passionate, idealistic young Chinese in South-east Asia, inspiring them to join local anti-colonial struggles.

But the identity of the Chinese in South-east Asia was ambiguous. The influence that the new PRC had over the hearts and minds of these young people engendered distrust of their motives, and of China, among South-east Asian countries.

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Dance Ensemble Singapore performing an item called Harmony-Reflections. PHOTOS: SINGAPORE CHINESE CULTURAL CENTRE, MINISTRY OF COMMUNICATIONS AND INFORMATION

HAIWAI HUAQIAO AND HUAREN

It was in this context that China in the 1950s started to distinguish between overseas Chinese who were "haiwai huaqiao" and those who were "huaren".

Haiwai huaqiao referred to overseas Chinese nationals who retained their Chinese nationality, while huaren referred to overseas ethnic Chinese who had taken up their host country's citizenship. None other than then-Premier Zhou Enlai stated clearly that once huaren took up citizenship in their country of residence, they could no longer be considered Chinese nationals and should be loyal to their new home country.

Our forebears had to make a critical life decision: to remain in Singapore or to return to the motherland. In the end, the majority chose to remain in Singapore. And together with the other races, they went on to build a multicultural society and country here.

In the 1960s, as Singapore progressed towards independence, Chinese community groups worked with the Government to support Singapore's social and economic progress, and our national defence.

When we introduced national service in 1967, the Singapore Chinese Chamber of Commerce and Industry (SCCCI) presented the first two batches of enlistees with medallions engraved with the words "National Service" and "尽忠报国" (dedication and loyalty to the country).

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In this photo from the Ministry of National Development, Minister for National Development and Second Minister for Finance Lawrence Wong is seen unveiling a friendship sculpture at the Sino-Singapore Tianjin Eco-city last September.

And in the following year, when the Government created the National Defence Fund with a target of raising $10 million, the SCCCI raised more than $1 million for the fund. As these examples show, the Chinese population had by then transferred their loyalty to Singapore and had started identifying themselves as Singapore citizens.

The Chinese Singaporean identity formed gradually over the last 200 years. We honour and commemorate our forefathers' dedication to their motherland, as China was then. This was part of our journey to becoming Singaporeans. Thus we made Wanqingyuan a national monument and also erected a memorial there to the Nanyang Transport Volunteers.

Similarly, every year on Feb 15, Singaporeans of all races and faiths attend a solemn ceremony at the Civilian War Memorial to remember and honour those who perished in World War II. The Japanese Occupation was a tragic experience for all in Singapore. But it was also a bonding experience, for it crystallised and aroused a national consciousness among the different races here and made us determined to become masters of our own fate.

The Malay and Indian communities have similar stories to tell about the evolution of their own identities here. They, too, came to Singapore as sojourners. During the anti-colonial struggle, many Indians here were inspired by India's own struggle for independence, and the Malays by the nationalist movements in Indonesia and Malaya. Indeed, our own battle cry then - Merdeka! - was originally the slogan of the Indonesian and Malayan independence struggles.

Just like the Chinese, the local Malays, Indians and Eurasians progressively sank their roots here.

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In this file photo from the Ministry of Communications and Information, Prime Minister Lee Hsien Loong is seen at the opening of Google’s new campus on Nov 10, 2016.

We may have first been politically awakened by world-stirring events in different, distant lands. But we all came to see this island-nation as the country where our loyalty and our future lay.

This historical arc - in the words of the Bicentennial Experience, "From Singapore, To Singaporean" - is what makes us uniquely us. Even today, new immigrants have to go through this process, before gradually integrating themselves into Singapore society and becoming fully Singaporean.

Now, as the world enters troubled times, Singapore faces new and daunting challenges. Being aware of our history, of how we became Singaporean, will help us understand the development of our national consciousness. This in turn will lend us a perspective as we navigate the turbulent voyage ahead.

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Wanqingyuan, today’s Sun Yat Sen Nanyang Memorial Hall, was the place where revolutionaries planned several uprisings to overthrow China’s Qing Dynasty.

US-CHINA TENSIONS

We are all worried about the growing tensions between the United States and China. Their disputes have placed other countries in a dilemma. No country wants to take sides and Singapore is no exception. This is why, tonight, I want to discuss US-China tensions and their impact on us.

Since its reform and opening up, China has developed rapidly to become the world's second-largest economy. This has significantly benefited both China and the world, in many ways. It has also reshaped the world order.

As the world's pre-eminent power today, the US has to accommodate an increasingly powerful and influential China. This is by no means an easy adjustment for the US. But the US needs to accept that China's rise is inevitable, and that it is neither possible nor wise to prevent it. Instead, the US should seek to build constructive bilateral relations, including economic cooperation, with China.

At the same time, as a rising global power, China needs to put itself in other countries' shoes and take greater account of their interests and viewpoints. By doing so, it will enhance prospects for peaceful and harmonious relations with other countries. It is also more likely to be viewed as a magnanimous country, and a partner willing to work for mutual benefit.

Naturally, the US and China will compete for influence and power in the world. But amid this competition, both parties also need to strengthen mutual trust and develop appropriate mechanisms to manage the inevitable frictions between them.

Regrettably, both the US and China have yet to find a way to manage their differences. Their tensions will persist for some time and this will impact the whole world.

IMPLICATIONS FOR SINGAPORE - EXTERNAL RELATIONS

There are two major implications for Singapore. First, on the external front, in our relations with the US and China. And second, on the domestic front, the impact on our economy.

Singapore is a good friend of both the US and China, and we want to remain so.

The US is our major security partner. We buy advanced military equipment from them, including fighter aircraft and missiles. Our troops train extensively with US forces. We also cooperate closely on counter-terrorism.

We hope the US will continue to remain engaged in the Asia-Pacific. The US' presence in the region has helped to underwrite regional peace and stability since World War II, and we hope it will continue to remain a presence in the region.

The US is also our important economic partner. The size and scale of US investments in Singapore far outstrip any other country's. These investments create many quality jobs for Singaporeans. We also have many collaborative endeavours with US institutions, companies and experts, in the fields of innovation, research and development.

With China, Singapore has established an "All-Round Cooperative Partnership Progressing with the Times". We have extensive economic cooperation with China, including three government-to-government initiatives, in Suzhou, Tianjin, and now in Chongqing. China is also our largest export market. Singapore companies have sizeable investments there, as do Chinese companies in Singapore.

ADVANTAGES AND CHALLENGES OF A COMMON HERITAGE

Our relations with China are unique. Apart from China itself, Singapore is the only sovereign country in the world with a majority ethnic Chinese population. This shared cultural heritage is an advantage, for it helps us deepen people-to-people ties and strengthen cultural exchanges with China. All this helps to build good relations between our two countries, promoting understanding and partnerships between our peoples, companies and institutions.

But we must always remember to engage and cooperate with China as Singaporeans. We have our own history and culture. Hence, we have our own perspectives on various issues and must take our own stand.

Being a Chinese-majority country presents its own challenges for us in foreign affairs because it makes it easy for other countries to misunderstand us.

This is especially so when the US and China are at odds. If we support China, the US and other countries may think we do so because we are a majority-Chinese country, and therefore automatically defer to China. And if we support the US, China may misunderstand our motivations.

Sometimes, when Singapore and China take different positions on some issue or other, our PRC friends ask us: Since we share a common heritage, a common ancestry and a common language, why does Singapore not share our common view?

PRINCIPLES, NOT SENTIMENT

Our position is this: On any issue, our views and actions will always be based on principles, and not sentiment. Regardless of whom our audience is, whether it is in Singapore, Washington or Beijing, we always express the same views. When we can agree, we will do so. When we cannot, we must maintain our principled position and explain our stand.

We hope other countries will understand that Singapore is a multiracial, independent and sovereign country, with our own position on issues. And of course, Singaporeans ourselves must fully understand this as well.

We must be clear-eyed about our own national interests and understand the Government's considerations when we adopt principled positions on bilateral, regional or international issues.

IMPLICATIONS FOR SINGAPORE - ECONOMY

Aside from international relations, US-China tensions will also adversely impact the global economy. Supply chains will be disrupted; investments and R&D restricted; and people-to-people exchanges constrained.

Let me give you an example. The smartphones in your hands contain many components designed, produced and assembled in many different countries. It is so for Apple phones and Huawei phones alike.

 
 
 

However, if the US does not allow Chinese companies like Huawei to use American microchips, and US companies to use components manufactured in China, and if China does likewise, then, Chinese and American companies will each have to develop their own microchips, smartphones and telecommunication systems.

When we go overseas, we may have to carry multiple phones, just as we did years ago when we visited Japan, because Japan used the CDMA system while Singapore used GSM.

Notwithstanding such a bifurcated world, we still hope we can communicate with all our friends conveniently. So, the big headache for us is this: Which telecommunication system should we install in Singapore?

Singapore is a small, open economy that has benefited greatly from globalisation. If US-China relations continue to worsen, the world will continue to bifurcate. This augurs a more troubled future for us. Our growth will be affected. Singapore companies that export to China, and those that export to the US from factories in China, will be hit.

Some hope that manufacturers that decide not to set up in China may come to Singapore. A few may come, but most will not, given the nature of the industries and their primary considerations of cost and proximity to markets.

For example, clothing manufacturers will likely move their factories to Vietnam or Bangladesh; electronics to Mexico; furniture manufacturers to the Philippines. These companies will not prefer to locate in Singapore. Overall, deteriorating US-China relations is bad news for the world economy, and a definite minus for Singapore.

US-China tensions have already hurt confidence worldwide. But the deeper and wider structural effects I have described will only be felt over time. Nevertheless, we must begin preparing for these consequences, and adapt ourselves quickly to the new international realities.

CURRENT ECONOMIC SITUATION

This year, our economy has slowed down significantly. This is primarily due to weakening global demand and international trade, which have impacted our manufacturing sector and trade-related services. A cyclical downswing in electronics has affected our broader economic performance, especially in related sectors such as precision engineering and wholesale trade. The retail sector also continues to be under pressure from online shopping.

Thankfully, other sectors have so far not been very much affected. Retrenchment and unemployment rates remain low. Recently, I discussed these issues with NTUC secretary-general Ng Chee Meng, and with union leaders. They reported that while workers are worried, the slowdown has so far not significantly affected jobs.

Thus, the current situation does not warrant immediate stimulus measures. But if the situation worsens significantly, we will intervene promptly and appropriately to sustain our economy and the livelihoods of our workers. The Government and union leaders are watching trends closely and are fully prepared. We have experienced cyclical downturns like this in the past, and we are confident we can take this in our stride.

IMPORTANCE OF TRUST

Though the external environment may be adverse, we do have important strengths. This year, we attracted several major investments. One of these is by Finnish energy company Neste, which is investing more than $2 billion to expand its renewable energy plant here. This is a huge project which will create quality jobs for Singaporeans.

Neste's CEO, Mr Peter Vanacker, explained that his company chose Singapore because of our technological capabilities, our excellent business environment including infrastructure and logistics, and our extensive trade relations. And more importantly, they were looking for the best workforce in the world.

Neste also had high praise for the Economic Development Board (EDB). In sum, they chose us because they trusted EDB, our workers and Singapore.

As the Neste CEO said: "The most valuable resource in the world is trust. But to find trust, one must earn it first. And to keep trust, one must continue to earn it. And here in Singapore, we have found the right people."

This shows Singapore's high reputation among investors. Facing economic uncertainties as we do, it is all the more crucial to work hard to protect this trust that investors have in us.

SUPPORTING BUSINESSES AND WORKERS

Meanwhile, we must keep on strengthening our economic fundamentals to secure our longer-term competitiveness. Deputy Prime Minister Heng Swee Keat and the younger ministers are leading our economic transformation efforts. Their efforts are beginning to bear fruit.

With the support of the Government, our companies are innovating, digitalising their operations, expanding in overseas markets and training their employees.

The Jumbo Group is a good example. Well known for their chilli crabs, Jumbo started in 1987 and is now a listed company that has expanded internationally.

Jumbo's success is in large part due to its emphasis on training and development. This has helped it to retain Singaporean staff, in an industry that typically has a high turnover rate. By tailoring training to employees' individual potential and providing good mentorship, Jumbo has enabled its staff to upskill and grow with the company. Like 31-year-old Ng Zi Yang, who became an executive chef overseeing a cluster of restaurants today, only 10 years after entering the industry as a complete greenhorn.

Jumbo has joined Enterprise Singapore's Scale-up SG programme. This new programme helps promising local companies grow rapidly and stand out in their fields. Jumbo's CEO, Mr Ang Kiam Meng, himself recently attended a leadership programme in the US. The participants were all from the pioneer batch of 25 companies on Scale-Up SG. They are a diverse group, ranging from F&B to education, from furniture and maintenance to hospital and dental. If they came together, they could provide comprehensive services for an HDB township. On the course they made friends, shared experiences and discovered potential opportunities to collaborate.

I mention Jumbo for several reasons. Firstly, to remind employees to upskill and retrain, to remain relevant and employable. Secondly, to encourage companies in their transformation efforts. And thirdly, to assure both employers and employees of the Government's full support in their upskilling and upgrading journey. There are many government support schemes to help local enterprises develop and expand their businesses. This means more good jobs for Singaporeans.

CONCLUSION

I have spent some time tonight tracing our history and sharing my thoughts about international affairs and our economic situation. The Government is paying close attention to how the international situation is impacting us externally and domestically.

The high trust that other countries and investors have in Singapore is a vital advantage, and our precious asset. We must uphold this trust, so that we can pass it on to future generations. Then Singapore can continue to prosper, and our livelihoods can be assured.

I worry greatly that the coming decade will be more troubled than the last. Like the weather that is ever-changing - sweltering one minute, pouring rain the next - we will be buffeted by unexpected developments. We must prepare for this future, and with the same intrepid spirit and drive of our forebears, work together to overcome the difficulties ahead.

I firmly believe that if the Government and people are united, Singaporeans can continue to enjoy ever better lives, and Singapore will continue to shine in the world.

A version of this article appeared in the print edition of The Straits Times on August 19, 2019, with the headline 'Singapore's challenges in navigating US-China turbulence'. Print Edition | Subscribe