Your Excellencies Distinguished Guests, ladies and gentlemen I am delighted to be back here in Tokyo, and to address the Nikkei Conference again. Asia is a vibrant region with enormous promise. More than half of the world’s population live in Asia. The population is growing. The bulk are young, full of energy and dynamism. So there is much potential for Asia to take off. China is the world’s second largest economy. Also the largest manufacturing economy and exporter of goods, and the fastest growing consumer market. India is one of the fastest growing economies in the world. Home to a fifth of the world’s young population, a demographic dividend that will drive growth for many years. Japan is a major advanced economy which has been a key contributor to Asia’s growth, through its foreign investments, its technology transfers and its imports from the region. Southeast Asia too, with a population of 650 million – of whom, 60% are below the age of 35. Southeast Asia’s combined GDP of US$3 trillion makes it collectively the 5th largest economy in the world, and one that is growing steadily. Before the pandemic, McKinsey published a report in 2019 that predicted that Asia was on track to account for more than half of global GDP and to drive 40% of the world’s consumption by 2040. So there is much that Asia can look forward to. However, as the theme of this year’s conference suggests The world is divided. And realising Asia’s promise and potential in this divided world will be challenging. Let me mention two important geopolitical developments. First, Russia’s attack on Ukraine poses
a major threat to the global order. It contravenes the UN Charter and is a clear and gross violation of international law. It has upended the rules-based international system that all countries operate within and depend on. It also sets a dangerous precedent that jeopardises the security and existence of many countries, especially of small states like Singapore. Second, difficult relations between the US and China will directly affect the Asia Pacific region. These relations have grown increasingly tense in the last few years, and the rivalry is manifesting itself in Asia. If US-China relations continue on this path, it will lead to further bifurcation of technology and splitting of supply chains, or even worse unintended consequences How should Asian countries respond to these challenges, to keep the regional environment secure and stable, and enable all countries to grow and prosper peacefully and take their places in the sun? We have to study and learn from the European experience. And work hard to avoid the mis-steps and interactions which raised tensions and preceded the war in Ukraine. In the aftermath of Ukraine, European countries are now rethinking their strategic choices. They are regretting their over dependence on Russia for energy and are urgently taking steps to stop importing oil and gas from Russia as soon as possible, even if it means paying more for alternative supplies. Many of them are strengthening their defence postures. Including Germany, which is sharply increasing defence spending to over 2% of GDP. Meanwhile, Sweden and Finland, which have long been neutral countries, have applied to join NATO to protect themselves from Russia. It is completely understandable why ex-post, after Russia invaded Ukraine, the Europeans are making these moves. We hope that these moves will result in a more secure and stable Europe, although their long-term consequences are hard to foresee. Russia too will have to re-examine its strategic situation and goals and the relationship it would like to have with its European neighbours and the rest of the world. But in Asia, countries should be thinking not just of how to be better prepared should conflict unfortunately occur, but how to work together ex-ante before trouble happens, to maintain peace and stability in the region and reduce the likelihood of a conflict in the first place. We should maximise the opportunities for countries to work and prosper together and minimise the risk of tensions worsening into hostilities. How can we do this? First, on regional security. Individual countries will naturally re-examine their defence strategies and spending. And each will surely consider the need to strengthen its own defence capabilities to protect itself. In Japan and South Korea, sensitive issues are being raised publicly. Including whether to allow nuclear weapons to be deployed on their soil or even go a step further and build capabilities to develop such weapons. But if we only look at regional security from the perspectives of individual national perspectives, we may end up with an arms race, and an unstable outcome Countries must therefore also work together to strengthen their collective security. And they must do this beyond forming
alliances and formal groupings of like-minded partners, like the Quad or the AUKUS group. But also through engagement and confidence and trust building arrangements with potential adversaries. Even at the height of the Cold War, there were quiet channels of communication between the US and Soviet Union, at the top leadership level and between the armed forces. Such channels need to be worked out and established between the US and China, and between other countries in Asia which have disputes with each other. They help to reduce mistrust, clarify misunderstandings and manage acute incidents, which are bound to arise from time to time. In particular, countries must be very mindful, and cautious, in handling potential flashpoints that can trigger conflict. For example, on the Korean Peninsula the Taiwan Strait, the Senkaku or Diaoyu Islands, or the South China Sea. Preventing these complex issues from taking an untoward turn is far from straightforward because the parties involved not only have to consider strategic implications, but also respond to domestic political pressures. Therefore, it will require deft diplomacy, political judgement and statesmanship of the highest order. But the stakes are high, and countries must be willing to show restraint, accept differences and live with compromises. Because if these flashpoints are mishandled, a miscalculation or mishap could well trigger an escalation and serious consequences. As for which parties should be involved in regional security we must accept that many stakeholders will be involved, including some from outside of Asia They too have legitimate interests in Asia. Interest in maintaining a secure, stable region. Interest in keeping the region open for
business with all parts of the world. Interest in accessing sea lanes of communications in Asia vital to global shipping and commerce. The US has provided the framework for peace and stability for the region since end of the second world war. Even as the strategic balance shifts the US still retains this essential role, which no other country can take over. Australia, the European Union, and the UK also have strong security ties with Asia, and interests in the region. It is neither realistic nor wise to exclude these participants. Instead, our aim should be to achieve a regional balance of power and influence among all stakeholders. Not only among the Asian countries themselves, but also with others, such as the US, EU and UK so that we can promote a more stable
and secure environment in the region. At the same time, regional engagement within Asia and with the rest of world cannot just be based on security considerations and relations. Security cooperation must also be complemented by tangible and mutually beneficial economic cooperation because countries with stakes in one another’s economic success have greater incentive to work together and to overcome problems between them. In response to geopolitical tensions, countries have increasingly emphasised resilience and national security considerations over the economic gains from free trade and investment flows. But they should be very careful about taking extreme measures, pre-emptively before conflicts arise. Whether to disconnect themselves from global supply chains and strive for reshoring or to go for “friend-shoring” and to cut off countries that are not allies or friends. Such actions shut off avenues for regional growth and cooperation, deepen divisions between countries and may precipitate the very conflicts that we all hope to avoid. In particular, for major powers like the US and China, economic cooperation with Asian countries demonstrates convincingly that their engagement is not just to enhance their own power and reach in the region, but also to yield tangible, win-win benefits to their partners. The US has extensive economic ties with Asia, including substantial trade and investments. President Obama pursued the Trans Pacific Partnership (TPP). This was a high-quality free trade agreement offering enhanced market access to the US. Its participants spanned both sides of the Pacific, including developing as well as developed countries. Unfortunately, under the Trump Administration, the US ultimately walked away from the TPP prompted by domestic political considerations. But the remaining 11 members came together to conclude the CPTPP, thanks to Japan’s leadership. Under the Biden Administration the US has not re-joined the CPTPP. Instead, President Biden has promoted the Indo-Pacific Economic Framework (IPEF). It was launched just this week here in Tokyo. Japan and Singapore are among the 13 countries participating in the Indo-Pacific Economic Framework. The IPEF promotes flexible collaboration on four sets of issues: Trade; Supply chains; Clean energy, decarbonisation and infrastructure; Tax and anti-corruption. This forward-looking agenda also covers the digital and green economies, themes that will resonate well in the region. However, the IPEF does not include trade liberalisation or market access. It is not a free trade agreement and therefore not a substitute for the TPP. But it demonstrates that the Biden Administration values its partners in Asia, and appreciates the importance of engaging them through economic diplomacy. We hope the IPEF will lead on to a Free Trade Agreement, including the US and its Asian partners one day, when US politics allows. Meanwhile, China’s economic influence in Asia is large and growing. This is a natural and positive consequence of China’s continuing growth and development. It has benefited the region immensely. In fact, China is already the largest trading partner for almost every country in the region, including Singapore and Japan. It is far better that China’s economy be
integrated into the region, than for it to operate on its own, by a different set of rules. China has launched broad initiatives, such as the Belt and Road Initiative (BRI) and the Global Development Initiative (GDI), to systematically develop its regional and multilateral links. Many countries have welcomed these positive initiatives, including Singapore, which supports the Belt and Road Initiative and has joined the Group of Friends of the Global Development Initiative. We look forward to China engaging its partners through these initiatives in a constructive and mutually beneficial manner, in order to foster a conducive, open region where countries can continue to grow their economic ties with each other, and with the rest of the world The various security arrangements and economic engagements need to fit together to form an open and inclusive regional architecture. A lot will depend on how relations between the US and China develop. Whether the US and others are able to accommodate China’s growing influence and legitimate interests. How China accepts its increasing responsibilities as a global player and demonstrates its benign objectives in the region. And also how the two can jointly realise their mutual longer-term interests in Asia to build a region that is open and stable, one where countries big and small can coexist side by side, manage their differences, compete and cooperate peacefully together. The US-China rivalry is inevitably
affecting all countries in Asia. It is natural for some countries to
be closer to one side or the other. But most countries would prefer not to
be forced to choose between the US and China. There will be no good outcome if Asian countries are split between two camps, each siding with one or the other. A more stable and less tense configuration is for the two powers to have overlapping circles of friends, and countries find it possible to have friends on both sides. Security and economic schemes in Asia should conduce towards this outcome. ASEAN plays a significant role in this
regional architecture. We welcome the broad international support for ASEAN and ASEAN Centrality in regional affairs. Amongst others, the Quad countries and South Korea have issued Leaders-level statements reaffirming the objectives and principles of the ASEAN Outlook on the Indo-Pacific. Prime Minister Kishida of Japan has emphasised that it is in ASEAN and Japan’s common interest to have an Indo-Pacific region with “ASEAN at its centre” that is “peaceful and stable”. ASEAN Centrality is not just a concept, but has led to significant forums and mechanisms to foster regional integration and interdependence. For example, the various ASEAN-Plus platforms, including the ASEAN Regional Forum and the ASEAN Defence Ministers Meeting Plus, which offer countries neutral venues for dialogue and engagement. Another important initiative is the RCEP, the Regional Comprehensive Economic Partnership. The RCEP is a FTA with an open and inclusive framework. China is a member, so are Japan South Korea, Australia and New Zealand, all of which have close security and economic ties with the US. And of course, there is ASEAN, which initiated the idea and brought everybody together. Given its influence and resources, Japan has a major role to play in regional affairs. Japan is a leading investor in Asia, and a strong advocate for regional trade liberalisation. However, in the security realm, the history of the Pacific War has led Japan to adopt a low-key posture. With the passing of the years and generations and in a new strategic environment, Japan should consider how it can come to terms with the past and put to rest these long outstanding historical issues. This will enable it to make a greater
contribution to regional security cooperation and to participate in building and upholding an open and inclusive regional architecture. For the last few decades, Asia has been fortunate to enjoy a stable and secure environment. This stability has been critical to the region’s dynamism and prosperity We hope that the decades ahead will see peace prevailing, and economic progress continuing in Asia. But we cannot assume that this happy state of affairs will persist As Europe’s experience shows, things can go wrong, and conflict can break out. And war in Asia is a scenario we cannot rule out. Therefore, Asian countries must continue to strive to deepen cooperation between ourselves, foster mutual trust and work out our differences. This is essential to maximise our chances of maintaining the positive momentum of growth and development and realising the promise of a peaceful and vibrant Asia in the 21st century. Thank you very much!
