SINGAPORE - The world is at another crossroads in the fight against Covid-19, and if it does not step up global cooperation, it may be caught in a vicious circle of never-ending waves of infection.

Such cooperation is possible only if there is a stable global order, one which is increasingly under pressure due to growing strategic competition between the United States and China, said Deputy Prime Minister Heng Swee Keat on Thursday (May 20).

Speaking at the virtual 26th International Conference on the Future of Asia, better known as the Nikkei conference after its organiser Nikkei Inc, Mr Heng said US-China competition is "here to stay" for the foreseeable future.

"For both the US and China, domestic considerations remain paramount. Neither can afford to appear weak nor be seen to be conceding ground to the other," he said.

He noted that even as China marks the politically significant 100th anniversary of the founding of the Communist Party of China this year, in the US, there is strong bipartisan consensus and public support for a tougher approach towards China.

Competing constructively and building trust

It is not unusual for major powers to have disagreements or to compete for influence, said Mr Heng.

What is important, he said, is that competition be conducted within a stable framework so as to defuse tensions, and to avoid a situation where differing interests prevent both sides from cooperating even on common interests - or worse still, escalate into armed conflict.

"While I believe that competition may be inevitable, it need not be zero sum. It is possible for both sides to find a new mode of constructive competition," he said.

"The key is for both sides to work towards a modus vivendi, of building confidence and trust, and competing within a rules-based multilateral system where there are established rules and norms of engagement. Healthy competition can spur innovation to create better solutions to the world's challenges."

He noted some encouraging steps have been taken, such as the first high-level meeting between both sides in Alaska in March, and early signs of cooperation on climate change.

In April, US and China climate change envoys John Kerry and Xie Zhenhua met in Shanghai to discuss tackling the climate crisis. Chinese President Xi Jinping also attended the Leaders' Summit on Climate hosted by US President Joe Biden.

Mr Heng expressed hope that by building on areas of common interest, both the US and China can eventually arrive at a framework for stable competition.

But he cautioned that US-China strategic competition could intensify. It will not be straightforward to achieve a new equilibrium, as both countries will continue to jostle for strategic influence, particularly in Asia.

He added: "I speak on behalf of many, if not most, countries in the region that we welcome and want to strengthen relations with both the US and China. We hope to engage both constructively. Within South-east Asia, we welcome their continued cooperation and support for Asean centrality and unity.

"But with the ongoing strategic competition, we will need to navigate greater uncertainty and possibly turbulence."

How Asia can emerge stronger from Covid-19

To emerge stronger from the crisis, Asia can further strengthen the regional architecture and partnerships, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Mr Heng said.

Former president Donald Trump withdrew the US from the deal during his first week in office, leaving 11 other countries negotiating the TPP - including Singapore - to form the trade agreement.

"I know that the current political conditions make it difficult for the US to rejoin, but things are never static, and the US should not rule it out," Mr Heng said.

While the idea of the Biden administration joining the CPTPP trade deal has been floated, significant barriers remain, including domestic considerations within the US.

Another key pact is the Regional Comprehensive Economic Partnership (RCEP), whose next important step is to expedite ratification. A number of countries including Singapore have already done so, and the RCEP remains open to India when it is ready, he said.

"The CPTPP and RCEP are important building blocks for the region and for the world. The door remains open for other like-minded partners to join us. Both agreements also serve as pathfinders for a possible FTA of the Asia-Pacific, one which should include the US, China, and India.

"Such an FTA will shape economic relationships and the region's geostrategic landscape for years to come."

Mr Heng said Asia can continue to maintain constructive dialogue on difficult issues such as the Korean Peninsula, Taiwan Strait, South China Sea and Myanmar.

Many of these are long-standing issues with entrenched positions by the stakeholders, said Mr Heng, and while there are no easy solutions to bridge the divergent interests, major conflict could have catastrophic consequences.

"So, the region must do what we can to reduce the risk of miscalculations, and prevent situations from boiling over."

Countries must also invest in emerging opportunities across borders, so that they can raise living standards and share in one another's growth, Mr Heng said.

One area is the huge infrastructure needs in the region. He noted that the funding gap in developing Asia, estimated at US$1.7 trillion (S$2.3 trillion) per year before Covid-19, would have increased since then.

No government would be able to fund these projects on its own, he said. Greater collaboration between countries, multilateral development banks and the private sector is needed to enhance collective capacity.

Japan, where households are holding on to almost US$10 trillion in cash and deposits, can consider investing some of these monies to earn returns while improving lives, Mr Heng said.

Countries can also collaborate on environmental sustainability, he said - not just in terms of natural capital, but also in ensuring high standards of quality and verifiability of carbon credits, and developing vibrant exchanges for these credits to be traded.

Mr Heng expressed optimism that Asian countries can navigate this difficult period by strengthening partnerships, investing in one another, and taking a constructive approach to handling hot spots in the region.

"In this way, Asia and the world can emerge stronger together from Covid-19, and contribute to a better global order."