US-China tensions, bifurcation will make it more difficult to innovate: DPM Heng

DPM Heng Swee Keat said the tech sector will suffer from bifurcation, as it would make it difficult to collaborate. PHOTO: MCI

SINGAPORE - The increased tension between the United States and China poses the greatest risk to the world’s peace and prosperity, and will impact innovation and collaboration in areas such as technology, Deputy Prime Minister Heng Swee Keat said.  

And there is a role for smaller, advanced economies such as Switzerland and Singapore to explore ways to strengthen such collaboration and innovation and rally like-minded partners, he added.

Speaking at the Swiss Chamber of Commerce gala dinner at the Dusit Thani Laguna Singapore hotel on Saturday, Mr Heng said competition is not a bad thing.

He added: “In fact, competition spurs innovation. But unhealthy competition leads to crosswinds.

“US and China strategic competition is now the greatest risk to the peace and prosperity of the world.

“Both sides have said that they do not want to go to war. But accidents or miscalculations may escalate quickly.”

Mr Heng said that even if tensions do not boil over, they have a destabilising effect on innovation and the global economy.

“We have already seen some trade decoupling between the US and China since tariffs were first raised on Chinese imports in 2018.

“Further decoupling could lead to major shifts in trade patterns – resulting in lower trade, investments and other economic interactions,” he warned.

DPM Heng, who is also the Coordinating Minister for Economic Policies, said the tech sector, which thrives on openness, will suffer from bifurcation, or division, as it would make it difficult to collaborate.

“All these will hold back the progress of humanity and our efforts to tackle common challenges like climate change,” he added.

Remarking on the dinner’s theme, Innovation, Mr Heng pointed out that through it, the world can be shaped into a better place.

While the operating environment has become more constrained, he said, the potential for innovation is limitless, and he called for more focus and collaboration to take the next leap.

He said: “We need greater focus in where we apply innovation. We must channel our energies towards solving common challenges, and there are many. The climate crisis is now especially urgent.

“The world is currently not on track to meet the UN Sustainability Development Goals by 2030. The Covid-19 pandemic and the ongoing turbulence have dented progress in many areas – from food and nutrition, to the environment.

“We must focus on applying innovation in these critical areas to catch up on progress.”

The UN Sustainability Development Goals include tackling hunger, and providing affordable and clean energy, as well as quality education.

Mr Heng said Singapore is committed to creating a conducive environment for innovation and has been investing in research and enterprise for decades.

The nation also provides a stable operating environment with strong intellectual property protection, an important enabler for innovation.

Mr Heng said strong free trade agreements are in place, adding that the next step could be to take strong trade connectivity into the digital realm.

“For example, Singapore and the European Free Trade Association are working towards commencing negotiations on a Digital Economy Agreement.

“As small, innovative, advanced economies, Switzerland and Singapore can do more to strengthen interlinkages, including in innovation.”

Singapore and Switzerland collaborated to co-organise the inaugural Point Zero Forum in Zurich in June.

The forum, which saw more than 1,000 participants, was aimed at broadening opportunities between Europe and Asia.

The two countries will collaborate again to organise the 2023 edition from June 26 to 28 in Zurich, with DPM Heng in attendance to co-launch the forum.

Next year’s event will focus on pushing the boundaries of Web3 and green finance. Web3 refers to a decentralised Internet service using blockchains.

Said Mr Heng: “On Web3, one area that the forum will focus on is how we can raise confidence in the adoption of digital assets with the right safeguards, regulations and new technologies.

“In the area of green finance, one emphasis is on developing enabling technologies for companies to track their environmental, social and governance commitments and to combat greenwashing.”

Mr Heng added that small, innovative and advanced economies such as Switzerland and Singapore can be “pathfinders” that use the Point Zero Forum and other means to rally like-minded partners.

Join ST's WhatsApp Channel and get the latest news and must-reads.