November 26, 2025 • 28 mins
On this episode of Trumponomics, host Stephanie Flanders sits down with Singapore Foreign Minister Vivian Balakrishnan to unpack the shifting dynamics of global trade in an era of US protectionism and rising geopolitical tension.
From Donald Trump' retreat from America's postwar role to the deepening lack of trust between Washington and Beijing, Balakrishnan explains why today’s economic disruptions are less a sudden storm than “geopolitical climate change.” Yet amid fractured supply chains and rising uncertainty, he offers a note of optimism—highlighting how Asia, Europe and other mid-sized economies are forging new alliances to keep globalization alive.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. China is not able
or winning to replace the US as the underwriter of globalization.
So we are to quote my Prime Minister in US
interacting them a state of messy transition. Cromwell world in
which there was an underwriter an enforcer, and then underwriter
(00:26):
and enforcer has now decided to become disruptor in chief
for domestic political reasons.
Speaker 2 (00:41):
I'm Stephanie Flanders, head of Government and Economics at Bloomberg,
and this is Trumpnomics, the podcast that looks at the
economic world of Donald Trump, how he's already shaped the
global economy and modern earth is going to happen next
This week, I'm sharing a conversation with Singapore's top diplomat,
Vivian Balakrishnan. If we look back at the global economy
(01:04):
in twenty twenty five, much of what we might have
expected from a second Trump term has happened. And then
some a rupture in the Western Alliance, are withdrawal or
stepping back from multilateral decision making fora like the G
twenty and the cop A more aggressive stance towards enemies
in America's backyard. It's all there, but one thing we
(01:25):
haven't seen is a global trade war. Though the US,
we know, has imposed hefty tariffs on all of its
trading partners, those countries, with the notable exception of China,
have not fought back. Instead, in effect, they've said, we
don't like this, but we're darn if we're going to
make it worse. The US might wish to raise high
tariff walls around its economy, rest of US are going
(01:46):
to keep on opening up and if possible, do even
more trade amongst ourselves. That is a big good news
story from this year that we shouldn't forget, and I
was reminded of again last week at the Bloomberg New
Economy Forum in Singapore, where you sit looking out at
the mass of container ships in the Singapore Strait. About
(02:07):
twenty five percent or so of global exports and imports
passes through that crucial shipping corridor, giving small but super
successful Singapore a very large stake in sustaining a global
trading system and incidentally a bird's eye view of everything
happening in Asia. This country also has a knack of
producing rather aerodyite public servants, so at the start of
(02:30):
the forum on November nineteenth, I sat down with one
of them, Foreign Minister Vivian Balakrishnan, to talk about the
meaning of the recent trade deal between the US and China,
what the shifting global landscape means for Asia. He was
at both the Asian and APEX summits where some of
those deals were done, and I began by asking him
whether the new trade partnerships that Singapore and others were
(02:53):
hoping to build without the US could really reshape the
future of global trade.
Speaker 1 (03:03):
Well, there's a quote attributed to Ernest Hemingway, how did
you go bankrupt? It says two ways, gradually and then suddenly.
So hold that thought in mind. This year has been
the year of sudden changes, but actually the gradual changes.
The pressure has been building up for a long time.
(03:25):
The first point I wanted to leave with you is
the role of the United States for the last eight decades. Actually,
it is historically unprecedented. The ultimate winner of the Second
World War, forty percent of global GDP, that was his
share of global GDP, decided, instead of conquering and eliminating
(03:45):
the Vanquish, rebuilt Germany Europe through the Marshall Plan, and
it set really a rules based globalization with economic integration
at the core. And this is highly, highly unusual and unprecedented.
So that's the first point. It is about the US.
(04:07):
Second point is that actually the pressures on the US
to give up on this has been building up for
a long time. And what I mean, if you think
about it, what the US did for eight decades was
to provide first the market, second technology, third capital, and
(04:29):
rules based economic integration. The first beneficiary of it, apart
from Europe, was Japan, and then you had the Asian
tigers Hong Kong career to Singapore and then the rest
of Southeast Asia. But the real winner of rules based
free trade has actually been China. And the US is
(04:50):
only two hundred and forty nine years. It has never
met a peer competitor with the scale, the ability, and
the willingness to reorder the world in a way that's
favorable to it.
Speaker 3 (05:04):
But the point is that China, if you.
Speaker 1 (05:09):
Look at this per capita GDP, it's still a middle
income country. And China is not able or willing to
replace the US as the underwriter of globalization. So we are,
to quote my Prime Minister, in an interregnum, a state
of messy transition from a world in which there was
an underwriter an enforcer, and that underwriter and enforcer has
(05:34):
now decided to become disruptor in chief for domestic political
reasons because after eight decades of providing capital, technology, and markets,
what the middle class in America has seen is the
industrialization russ belts, hopelessness and middle income stagnation. And guess
(05:55):
what elections are local. So it is a completely legitimate
question for the American water to say, wait a minute,
why should we underwrite in blood and treasure, this system
which seems to have profited the rest of the world
and especially a big peer competitor, And I think we
(06:16):
need to pull back. So you see my point about
gradually and then suddenly you know it's like an iceberg
or a continental ice shelf falling. But actually the climate
warming was predated that. So my point is what we're
witnessing today is not just a change of whether this
(06:36):
is real climate change, dual political climate change.
Speaker 3 (06:41):
So that's contact setting.
Speaker 2 (06:43):
I think it's historically unprecedented also to have a single
global superpower almost voluntarily step back from a lot of
its obligations, not be forced to do so, not lose
a war, but just decide I don't want to do
this anymore.
Speaker 1 (06:58):
Yes, an unusual to have such a benige hegemon in
the first place, and for us now to say, where.
Speaker 3 (07:05):
Did that hagamon go?
Speaker 1 (07:07):
I'm saying, if you take a longer view of history
in jee politics, the point is this was a unique period.
I've tried to go back in it. I can't find
another period in history when we had such a benine
hegamon when you just.
Speaker 2 (07:22):
Think back even just a few years ago, and then
we would have been on this stage talking about decoupling. Yes,
and that may be the climactic change, to distinguish from
the change in the weather, as you've said. But the
Biden administration, I think for many of it, of the
US allies, it felt that the US was asking countries
to choose between the US and China, and that was
(07:43):
obviously challenging. Nowhere more than here, President Trump has had
a much many people would say, less consistent, certainly more freewheeling,
unilateralist approach. It feels a little bit like the world
is less divided between US and China now and more
the US and the rest of the world just left
(08:04):
in a mess. Well, is that easier or harder for well.
Speaker 1 (08:07):
First of all, the American ambassador is here, so I'm
not here to be an apologist. But I would say
President Trump as a person in fact, has been uniquely
consistent for decades.
Speaker 3 (08:22):
What do I mean?
Speaker 1 (08:23):
Watch the interview with Operah Winfrey back in nineteen eighty eight,
his views on war, anti war, his views on free trade.
It's an avenue for America to be taken advantage of
his views on business in a main street real estate
way as opposed to Wall Street and financial engineering.
Speaker 3 (08:43):
His views on immigration actually have been remarkedably.
Speaker 1 (08:46):
Consistent, and I think people don't give enough marks for
that point. So he is consistent. It's just that his
methodology his presentation is somewhat novel, and people get react
to that. But my point is American policy and the
President Trump in fact is reflecting long held, deep convictions.
Speaker 2 (09:06):
I think you are right. I guess the exception to that,
and I'm interested in whether you read it the same
way you've been at the recent meetings with your Prime
Minister in Malaysia and Korea, where we did see this
deals between the US and China. Yes, but it will
not have been lost on many of the people around
the table. That China was ending up with a relatively
(09:26):
better position than many of the other countries in the
region who had thought that they were going to be
an alternative to China. For US manufacturers, well, that feels
a little inconsistent with wanting to wean American industry off
Chinese manufacers.
Speaker 1 (09:42):
Well, again, I would distinguish between strategic and tactical. I
think what we've witnessed so far is the tactical pause.
The fundamental problem in the US and China is an
almost complete lack of strategic trust, and that means each
side has to assume the worst of each other, and
(10:02):
even if you're taking precautions, it's viewed as escalatory. Both
sides have identified pain points, and I think what you've
seen so far is not a strategic realignment or southern
dawn of strategic trust, is that both sides have decided
they need time, they need a tactical pause whilst you
(10:24):
get on with the real business. And the point about
decoupling is worth unpacking because what we are witnessing the
world right now is a couple of phenomena. Number One,
you've witnessed the weaponization of everything, weaponization of the dollar,
weaponization of finance, weaponization of critical minerals, global supply choins.
(10:45):
Interdependency used to be a good thing. Now it's a vulnerability.
But my point about weaponization of everything, you know, Newton's
third law applies in diplomacy too. For every action, there's
an equal and opposite reaction. So the weaponization where everything
has led to an erosion of trust, has led to
(11:06):
a need to assume the worst and to prepare for it.
And in the absence of trust, it's very hard to
actually have strategic alignments. So that's first part. What you're
witnessing now is a tactical pause. The strategic problem remains.
The next aspect of what's going on now is the
fracturing of supply chains. And it's not an ideological point,
(11:29):
but I think especially during COVID, you found it.
Speaker 3 (11:32):
Even simple things like making.
Speaker 1 (11:34):
A mask, which it's not rocket science, but the essential
components were not within reach and everyone was panicking and
you didn't have access to it. So the fracturing of
supply chains in the name of national security and in
search of resilience actually means a world which hitherto has
been based on efficiency, is now building supply chains on
(11:58):
a basis of near ding on shoring French showing. Economically,
what that must mean is some inflation because you're no
longer choosing the cheapest and the best, most efficient, You're
now having other considerations. So watch that a bottom inflation.
The third point is the global comments. I've been involved
(12:21):
in this game long enough, so I'll give you an example,
the Paris Climate Change Agreement. The only reason that got
done is because America and China are on the same side,
and we're able to drag the rest of us an
imperfect but important agreement. Today if the two main players
are not in the same room, and it goes further
(12:43):
than that.
Speaker 3 (12:44):
In fact, it's not just a.
Speaker 1 (12:46):
Matter of picking out your marbles and leaving the game,
but you're actually disrupting the game. And my worry is
that we're going to be unable to deal with the
global comments. It means climate change, pandemic, the challenges from AI.
We won't be able to respond adequately to it because
the two key players either are disrupting actively or are
(13:13):
spoiling for a fight and are certainly not willing to
restrain themselves with multilateral rules imposed by lil Putin countries
begins medium and small elsewhere.
Speaker 3 (13:27):
I hope that's not too depressing.
Speaker 2 (13:41):
It just seems a muddier picture than the decoupling team US.
Speaker 3 (13:46):
It's resty.
Speaker 2 (13:47):
But as your concern, the long term trend, yes, I
mean someone has likened it to a couple saying we're
going to divorce in ten years, but we have to
live together before then. You still need. Long term trend
is dec coupling between the US and China.
Speaker 1 (14:01):
I think without the strategic trusts, the logic for decoupling,
at least partially in the name of national security and
anxiety over competitiveness, will continue to play out.
Speaker 3 (14:18):
And that's that's what we're witnessing.
Speaker 1 (14:20):
But if I can come back to where you started
with a piece of good news, I said, why hasn't
the rest of the world retaliated? I think a couple
of reasons. Number One, they're a far bigger elephant or
ego than the rest of us. So what's the point
of retaliating when in fract the little guy will be
the ultimate loser. So that's the first thing. Second, and
(14:43):
I'm coming to your good news. If you leave aside
the two big powers, and if you think if you
open a World Atlas and draw a diagonal Europe, the
Middle East, South Asia, Southeast Asia, Australi in New Zealand,
and then you draw two spokes, one to Northeast Asia
(15:03):
particular Japan Career, and another spoke southwest through Africa and
South America.
Speaker 3 (15:12):
Guess what.
Speaker 1 (15:13):
In fact, there is still a majority of countries and
even I would say the majority of global GDP, that
still wants to operate on supply chain efficiencies, on economic integration,
on rules based globalization. The only thing is the enforcer
in chief is no longer there and there is a
(15:34):
need therefore to assemble or coalition of the willing. So
what you're watching now, all that's scurrying around by medium
and small economies is to keep globalization alive, reform what
needs to be reformed, and there's a lot that needs reform,
but to work together in a more collegiate way, knowing
full well that the underwriter, the enforcer, is not going
(15:57):
to be doing the heavy lifting. So that's where I
think there is a glimmer of hope. And that's why
you know, my Prime Minister and I've been discovering around
to regional and international conferences and the good news I
agree with you. The majority people in fact want some order,
some stability, and some benefits, economic benefits from working together,
(16:21):
from inter operating, And what we are hoping ultimately is
that when things settle down between the two big bodies,
they will then rediscover the benefits of globalization.
Speaker 2 (16:34):
One of the initiatives that you had in the summer
was with the Gulf and the GCC. Do you see
that moving forward?
Speaker 1 (16:41):
Well, if you look earlier this year, we had that
when we had an RC and some that we included,
the GCC and China in Singapore were members of both
the CPTPP and our CP which are big mega free
trade deals. We're trying to convince the European Union, who
is also a flexy pro trade pro rules.
Speaker 3 (17:04):
Are they going to join? No, I think that's a
bridge too far.
Speaker 1 (17:07):
But can we get a partnership between the European Union
and the CPTPP, especially a CPTPP which is.
Speaker 2 (17:15):
Expanding, You've got to think we need a bit.
Speaker 3 (17:18):
I know, I know, In fact, I.
Speaker 2 (17:21):
Think that's why everyone talks about it, honestly.
Speaker 3 (17:23):
I know.
Speaker 1 (17:24):
But if it's strip aside the labels and the names,
I mean, the point is, is there benefit from globalization,
from efficiency, from interoperability, from standards, from peaceful resolution of disputes,
including trade disputes. The answer is unequivocally yes. But we
(17:45):
need to do it now and everyone needs to chip in.
So I think the EU is a natural partner with
the CPTP. So think of the EU and the Pacific.
Can we construct something that cuts a diagonal across go
and it's Africa keen on this. I think they are
South America. I mean, you may be surprised, even little Singapore.
(18:07):
We've signed free trade deals with Mercasol, which is Argentina, Brazil, Ecuador, Paraguay, Uruguay.
We've even signed a free trade agreement with the Pacific
Alliance Mexico, Colombia, Chile. So the point is you'll be surprised.
The appetite for economic integration remains, and that's what Singapore
(18:28):
is working now.
Speaker 3 (18:28):
Of course, I'll tell you, of course we are biased.
Speaker 1 (18:31):
This is Manhattan without upstate New York, or this is
one fifth of Rhode Island without continental United States, or
if you want another uncomfortable analogy, Singapore is just twice
the size of Gaza, but with three times the population.
So we're a tiny place in which our trade volume
is three times our GDP. So I hope you understand
(18:54):
when we promote free trade, it's lifeblood. It's not a
negotiating point, right, And when we say rules are better
than the alternative, because the alternative is right, it might
be it's beautiful and small. It's irrelevant. So I will
confess this is a self interested argument.
Speaker 2 (19:15):
But you've talked about importance of rules, but also a
country is working together.
Speaker 3 (19:20):
Yes, absolutely, not enforced.
Speaker 2 (19:21):
Should the Southeast Asian economies, even the Asian countries have
worked together more in negotiating these trade deals with the US.
You talk, No, I don't. I don't buy nactual arm
wrestling you describe.
Speaker 1 (19:31):
Yes, No, I don't think that was necessary, not certainly,
not at this stage. I mean, if you look at
Asian as a horse, you know the terris range from
ten percent, nineteen percent, maybe twenty percent, and those.
Speaker 3 (19:45):
Numbers keep changing.
Speaker 1 (19:47):
Anyway, my point is, don't overreact to the headline of
after Day.
Speaker 3 (19:54):
Understand what's going on.
Speaker 1 (19:56):
So if you now bring your zoom lens to Arcian,
have we systematically brought down our trade barriers non tariff barriers?
Speaker 3 (20:05):
Is RCN fulfilling its mission?
Speaker 1 (20:07):
Of becoming a single production zone, a single investment zone.
Has there been economic growth in URSA? What are the
prospects of RCN in the next two decades. We think
we can double our combined GDP. If you add up
the combined GDP of RCN, which by the way, has
a population slightly larger than the EU, we're about number five.
Speaker 3 (20:28):
And because half of population is.
Speaker 1 (20:30):
Below the age of thirty five and our middle class
is growing, the long term prospects are right. So long
as we don't overreact, we don't do stuff that actually
boomer ranks back on us. And we just look at
what we did this year. We upgraded the RCAN agreement
on trading goods within r CM, we upgraded the rc
(20:52):
and China Free Trade Agreement, and we're still looking at
building more more bridges across the world. So my point
is that in fact, Southeast Asia is a zone of
hope and growth.
Speaker 3 (21:05):
The key thing is to focus on.
Speaker 1 (21:09):
The long term. And what does long term mean? It
means technology. Bearing in mind that we've got three technological
revolutions going on in real time simultaneously, AI, biotech, renewable energy,
and we're focusing on building up the infrastructure for that.
With focusing on educating a workforce, work creaty for that
(21:30):
kind of work, the world of AI and robotics, and
we're focusing on integrating, we can still increase our intrascient
trades significantly. And what about Asian Africa, Asian South America.
You know, it's some people call it South South. I
don't really like term, but my point is there is
still a majority in favor of this. I would also
(21:52):
point out the CPTPP began as four tiny states Singapore, Bruna,
New Zealand and Chile, and it only became TPP when
America and Japan came in. Now we knew by the
time Hillary Clinton had to withdraw from her support from
(22:15):
the TPP, which in fact she had a lot to
do with starting, that the cause of free trade was
in political problem. And I think all of us in
this room, who I would say are probably instinctive free traders,
need to realize that we didn't make the political case
for it. And you have to convince your local electorate
(22:39):
the jobs and wages and opportunity come from free trade. Otherwise,
if you don't understand the political reality that for every
free trade agreement, they are winners and losers. You need
to put seat belts on. You need to have compensatory mechanisms.
And whilst you don't expect governments to choose winners and
(23:01):
losers at the enterprise level, but governments do need to
be activists infrastructure, education, pro enterprise regulatory environments.
Speaker 3 (23:13):
You do need an active government.
Speaker 1 (23:16):
But what you don't want is completely state directed capitalism
where you pick winners and lois. So we think that's
ultimately a dead end. So anyway, my point is, watch
this space. That's why there's still buzz in this part
of the world.
Speaker 2 (23:32):
We're going to run out of time. So I want
to just quickly ask you I started talking about the US.
I mean you have said obviously trade is the lifeblood
of Singapore, and you're absolutely at the center of looking this.
The one country that despite all these tariffs and trade
wars by the US, the one country that has managed
to increase its export growth this year's China. See that
(23:52):
country in many ways doubling down on a focus on manufacturing,
on export led growth, when many economists might have said
long term they have to be on a different path.
How destabilizing is that for this region, especially now they
have a slightly more well.
Speaker 1 (24:10):
I think what you're referring to you're being too delicate.
You're referring to over capacity. Actually, the world has had
unsustainable imbalances for some time. If you outsource all manufacturing
to China, you outsource all energy to Russia, and you
outsource security to America, I'm referring to the EU.
Speaker 3 (24:33):
That's not a sustainable model.
Speaker 1 (24:35):
And if the EU wants sort of strategic autonomy or independence,
it needs to get a grip on manufacturing, on its
industrial capacity, on its defense, and on its energy policies.
And I'm just giving you one example. In the case
of China, it's worth also reflecting because China became the
(24:56):
manufacturing center well and enjoying economies of skin. And by
the way, I must say, Chinese workers happened to be
really hard working and efficient. I don't think you can
follow China for that. But a world in which all
manufacturing is accumulating on one half, trade surpluses are accumulating there,
(25:18):
but those trade surplus are being recycled it used to
be recycled.
Speaker 3 (25:21):
Into T bills.
Speaker 1 (25:22):
What it meant is, for a while the Western consumer
enjoy low inflation, low interest rates, high quality.
Speaker 3 (25:30):
Goods at affordable rates.
Speaker 1 (25:32):
But actually we're consuming beyond what they were producing, and
we should not be surprised that this system based on
the imbalance was not sustainable. Now, if you imagine that
Americas shuts its market to the productive capacity of China
and the EU also follows suit I mean, and think
(25:53):
of automotives as an example.
Speaker 3 (25:56):
Then the question will be will China be able.
Speaker 1 (25:59):
To expand is domestic consumption to match its capacity or
will it still try to export its way? And if
it does, where will it export to?
Speaker 2 (26:11):
But that is what they do, right.
Speaker 3 (26:13):
No, I think.
Speaker 1 (26:14):
But I'm saying, let's, without being pejorative or making value judgments,
just ask yourself, do you need domestic changes to the
economic structure of China?
Speaker 3 (26:25):
I think we do.
Speaker 1 (26:27):
What does Southeast Asia, Africa and South America?
Speaker 3 (26:32):
One do we need infrastructure? We do?
Speaker 1 (26:34):
Is the productive capacity of China for the development of
that infrastructure, particularly green energy, AI and even biotech, which,
by the way, speaking as a doctor, the Chinese are
no slouches in that area too. So what I'm saying
is watch this space. I am sure adjustments will occur
(26:55):
both domestically and across borders. And across loads, and the
opportunity will be to try to catch these waves, catch
these new tides and wins so that we maximize opportunities
for the rest of us. So, don't you know, I'll
come back to the hopeful note in which you started.
Not all of us have lost our heads and reacted
(27:18):
in panic or even acted on sense of retribution. But
we've tried to take a longer term view of the
imbalances and of the trends, and to seek opportunities in
these interact names.
Speaker 3 (27:34):
Well, I think that's the basis of ourbitrage.
Speaker 2 (27:35):
For sixty years, things been fairly good at now.
Speaker 1 (27:37):
Now, but sixty years is you know, in Asia, sixty
years it's far too early to tell, So we never
take our survival for granted.
Speaker 2 (27:46):
Documentarish thank you so much for joining us and for
starting ourself on a hopeful footing.
Speaker 1 (27:51):
I hope, so, so don't lose your head, you know,
understand what's going on.
Speaker 3 (27:56):
Look for opportunities. There are opportunities.
Speaker 2 (28:09):
Thanks for listening to Trumpnomics from Bloomberg. It was hosted
by me Stephanie Flanders, and I was joined by Singapore's
Foreign Minister, Vivian Balachristian Trumponomics was produced by Samasadi and
Moses and with help from Amy Keen. Sound design was
by Blake Maples and Kelly Gary, and Sage Bowman is
Bloomberg's head of podcasts. To help Brothers find it, please
(28:31):
rate and review this podcast highly wherever you listen
Bloomberg Audio Studios, podcasts, radio news. China is not able
or winning to replace the US as the underwriter of globalization.
So we are to quote my Prime Minister in US
interacting them a state of messy transition. Cromwell world in
which there was an underwriter an enforcer, and then underwriter
(00:26):
and enforcer has now decided to become disruptor in chief
for domestic political reasons.
Speaker 2 (00:41):
I'm Stephanie Flanders, head of Government and Economics at Bloomberg,
and this is Trumpnomics, the podcast that looks at the
economic world of Donald Trump, how he's already shaped the
global economy and modern earth is going to happen next
This week, I'm sharing a conversation with Singapore's top diplomat,
Vivian Balakrishnan. If we look back at the global economy
(01:04):
in twenty twenty five, much of what we might have
expected from a second Trump term has happened. And then
some a rupture in the Western Alliance, are withdrawal or
stepping back from multilateral decision making fora like the G
twenty and the cop A more aggressive stance towards enemies
in America's backyard. It's all there, but one thing we
(01:25):
haven't seen is a global trade war. Though the US,
we know, has imposed hefty tariffs on all of its
trading partners, those countries, with the notable exception of China,
have not fought back. Instead, in effect, they've said, we
don't like this, but we're darn if we're going to
make it worse. The US might wish to raise high
tariff walls around its economy, rest of US are going
(01:46):
to keep on opening up and if possible, do even
more trade amongst ourselves. That is a big good news
story from this year that we shouldn't forget, and I
was reminded of again last week at the Bloomberg New
Economy Forum in Singapore, where you sit looking out at
the mass of container ships in the Singapore Strait. About
(02:07):
twenty five percent or so of global exports and imports
passes through that crucial shipping corridor, giving small but super
successful Singapore a very large stake in sustaining a global
trading system and incidentally a bird's eye view of everything
happening in Asia. This country also has a knack of
producing rather aerodyite public servants, so at the start of
(02:30):
the forum on November nineteenth, I sat down with one
of them, Foreign Minister Vivian Balakrishnan, to talk about the
meaning of the recent trade deal between the US and China,
what the shifting global landscape means for Asia. He was
at both the Asian and APEX summits where some of
those deals were done, and I began by asking him
whether the new trade partnerships that Singapore and others were
(02:53):
hoping to build without the US could really reshape the
future of global trade.
Speaker 1 (03:03):
Well, there's a quote attributed to Ernest Hemingway, how did
you go bankrupt? It says two ways, gradually and then suddenly.
So hold that thought in mind. This year has been
the year of sudden changes, but actually the gradual changes.
The pressure has been building up for a long time.
(03:25):
The first point I wanted to leave with you is
the role of the United States for the last eight decades. Actually,
it is historically unprecedented. The ultimate winner of the Second
World War, forty percent of global GDP, that was his
share of global GDP, decided, instead of conquering and eliminating
(03:45):
the Vanquish, rebuilt Germany Europe through the Marshall Plan, and
it set really a rules based globalization with economic integration
at the core. And this is highly, highly unusual and unprecedented.
So that's the first point. It is about the US.
(04:07):
Second point is that actually the pressures on the US
to give up on this has been building up for
a long time. And what I mean, if you think
about it, what the US did for eight decades was
to provide first the market, second technology, third capital, and
(04:29):
rules based economic integration. The first beneficiary of it, apart
from Europe, was Japan, and then you had the Asian
tigers Hong Kong career to Singapore and then the rest
of Southeast Asia. But the real winner of rules based
free trade has actually been China. And the US is
(04:50):
only two hundred and forty nine years. It has never
met a peer competitor with the scale, the ability, and
the willingness to reorder the world in a way that's
favorable to it.
Speaker 3 (05:04):
But the point is that China, if you.
Speaker 1 (05:09):
Look at this per capita GDP, it's still a middle
income country. And China is not able or willing to
replace the US as the underwriter of globalization. So we are,
to quote my Prime Minister, in an interregnum, a state
of messy transition from a world in which there was
an underwriter an enforcer, and that underwriter and enforcer has
(05:34):
now decided to become disruptor in chief for domestic political
reasons because after eight decades of providing capital, technology, and markets,
what the middle class in America has seen is the
industrialization russ belts, hopelessness and middle income stagnation. And guess
(05:55):
what elections are local. So it is a completely legitimate
question for the American water to say, wait a minute,
why should we underwrite in blood and treasure, this system
which seems to have profited the rest of the world
and especially a big peer competitor, And I think we
(06:16):
need to pull back. So you see my point about
gradually and then suddenly you know it's like an iceberg
or a continental ice shelf falling. But actually the climate
warming was predated that. So my point is what we're
witnessing today is not just a change of whether this
(06:36):
is real climate change, dual political climate change.
Speaker 3 (06:41):
So that's contact setting.
Speaker 2 (06:43):
I think it's historically unprecedented also to have a single
global superpower almost voluntarily step back from a lot of
its obligations, not be forced to do so, not lose
a war, but just decide I don't want to do
this anymore.
Speaker 1 (06:58):
Yes, an unusual to have such a benige hegemon in
the first place, and for us now to say, where.
Speaker 3 (07:05):
Did that hagamon go?
Speaker 1 (07:07):
I'm saying, if you take a longer view of history
in jee politics, the point is this was a unique period.
I've tried to go back in it. I can't find
another period in history when we had such a benine
hegamon when you just.
Speaker 2 (07:22):
Think back even just a few years ago, and then
we would have been on this stage talking about decoupling. Yes,
and that may be the climactic change, to distinguish from
the change in the weather, as you've said. But the
Biden administration, I think for many of it, of the
US allies, it felt that the US was asking countries
to choose between the US and China, and that was
(07:43):
obviously challenging. Nowhere more than here, President Trump has had
a much many people would say, less consistent, certainly more freewheeling,
unilateralist approach. It feels a little bit like the world
is less divided between US and China now and more
the US and the rest of the world just left
(08:04):
in a mess. Well, is that easier or harder for well.
Speaker 1 (08:07):
First of all, the American ambassador is here, so I'm
not here to be an apologist. But I would say
President Trump as a person in fact, has been uniquely
consistent for decades.
Speaker 3 (08:22):
What do I mean?
Speaker 1 (08:23):
Watch the interview with Operah Winfrey back in nineteen eighty eight,
his views on war, anti war, his views on free trade.
It's an avenue for America to be taken advantage of
his views on business in a main street real estate
way as opposed to Wall Street and financial engineering.
Speaker 3 (08:43):
His views on immigration actually have been remarkedably.
Speaker 1 (08:46):
Consistent, and I think people don't give enough marks for
that point. So he is consistent. It's just that his
methodology his presentation is somewhat novel, and people get react
to that. But my point is American policy and the
President Trump in fact is reflecting long held, deep convictions.
Speaker 2 (09:06):
I think you are right. I guess the exception to that,
and I'm interested in whether you read it the same
way you've been at the recent meetings with your Prime
Minister in Malaysia and Korea, where we did see this
deals between the US and China. Yes, but it will
not have been lost on many of the people around
the table. That China was ending up with a relatively
(09:26):
better position than many of the other countries in the
region who had thought that they were going to be
an alternative to China. For US manufacturers, well, that feels
a little inconsistent with wanting to wean American industry off
Chinese manufacers.
Speaker 1 (09:42):
Well, again, I would distinguish between strategic and tactical. I
think what we've witnessed so far is the tactical pause.
The fundamental problem in the US and China is an
almost complete lack of strategic trust, and that means each
side has to assume the worst of each other, and
(10:02):
even if you're taking precautions, it's viewed as escalatory. Both
sides have identified pain points, and I think what you've
seen so far is not a strategic realignment or southern
dawn of strategic trust, is that both sides have decided
they need time, they need a tactical pause whilst you
(10:24):
get on with the real business. And the point about
decoupling is worth unpacking because what we are witnessing the
world right now is a couple of phenomena. Number One,
you've witnessed the weaponization of everything, weaponization of the dollar,
weaponization of finance, weaponization of critical minerals, global supply choins.
(10:45):
Interdependency used to be a good thing. Now it's a vulnerability.
But my point about weaponization of everything, you know, Newton's
third law applies in diplomacy too. For every action, there's
an equal and opposite reaction. So the weaponization where everything
has led to an erosion of trust, has led to
(11:06):
a need to assume the worst and to prepare for it.
And in the absence of trust, it's very hard to
actually have strategic alignments. So that's first part. What you're
witnessing now is a tactical pause. The strategic problem remains.
The next aspect of what's going on now is the
fracturing of supply chains. And it's not an ideological point,
(11:29):
but I think especially during COVID, you found it.
Speaker 3 (11:32):
Even simple things like making.
Speaker 1 (11:34):
A mask, which it's not rocket science, but the essential
components were not within reach and everyone was panicking and
you didn't have access to it. So the fracturing of
supply chains in the name of national security and in
search of resilience actually means a world which hitherto has
been based on efficiency, is now building supply chains on
(11:58):
a basis of near ding on shoring French showing. Economically,
what that must mean is some inflation because you're no
longer choosing the cheapest and the best, most efficient, You're
now having other considerations. So watch that a bottom inflation.
The third point is the global comments. I've been involved
(12:21):
in this game long enough, so I'll give you an example,
the Paris Climate Change Agreement. The only reason that got
done is because America and China are on the same side,
and we're able to drag the rest of us an
imperfect but important agreement. Today if the two main players
are not in the same room, and it goes further
(12:43):
than that.
Speaker 3 (12:44):
In fact, it's not just a.
Speaker 1 (12:46):
Matter of picking out your marbles and leaving the game,
but you're actually disrupting the game. And my worry is
that we're going to be unable to deal with the
global comments. It means climate change, pandemic, the challenges from AI.
We won't be able to respond adequately to it because
the two key players either are disrupting actively or are
(13:13):
spoiling for a fight and are certainly not willing to
restrain themselves with multilateral rules imposed by lil Putin countries
begins medium and small elsewhere.
Speaker 3 (13:27):
I hope that's not too depressing.
Speaker 2 (13:41):
It just seems a muddier picture than the decoupling team US.
Speaker 3 (13:46):
It's resty.
Speaker 2 (13:47):
But as your concern, the long term trend, yes, I
mean someone has likened it to a couple saying we're
going to divorce in ten years, but we have to
live together before then. You still need. Long term trend
is dec coupling between the US and China.
Speaker 1 (14:01):
I think without the strategic trusts, the logic for decoupling,
at least partially in the name of national security and
anxiety over competitiveness, will continue to play out.
Speaker 3 (14:18):
And that's that's what we're witnessing.
Speaker 1 (14:20):
But if I can come back to where you started
with a piece of good news, I said, why hasn't
the rest of the world retaliated? I think a couple
of reasons. Number One, they're a far bigger elephant or
ego than the rest of us. So what's the point
of retaliating when in fract the little guy will be
the ultimate loser. So that's the first thing. Second, and
(14:43):
I'm coming to your good news. If you leave aside
the two big powers, and if you think if you
open a World Atlas and draw a diagonal Europe, the
Middle East, South Asia, Southeast Asia, Australi in New Zealand,
and then you draw two spokes, one to Northeast Asia
(15:03):
particular Japan Career, and another spoke southwest through Africa and
South America.
Speaker 3 (15:12):
Guess what.
Speaker 1 (15:13):
In fact, there is still a majority of countries and
even I would say the majority of global GDP, that
still wants to operate on supply chain efficiencies, on economic integration,
on rules based globalization. The only thing is the enforcer
in chief is no longer there and there is a
(15:34):
need therefore to assemble or coalition of the willing. So
what you're watching now, all that's scurrying around by medium
and small economies is to keep globalization alive, reform what
needs to be reformed, and there's a lot that needs reform,
but to work together in a more collegiate way, knowing
full well that the underwriter, the enforcer, is not going
(15:57):
to be doing the heavy lifting. So that's where I
think there is a glimmer of hope. And that's why
you know, my Prime Minister and I've been discovering around
to regional and international conferences and the good news I
agree with you. The majority people in fact want some order,
some stability, and some benefits, economic benefits from working together,
(16:21):
from inter operating, And what we are hoping ultimately is
that when things settle down between the two big bodies,
they will then rediscover the benefits of globalization.
Speaker 2 (16:34):
One of the initiatives that you had in the summer
was with the Gulf and the GCC. Do you see
that moving forward?
Speaker 1 (16:41):
Well, if you look earlier this year, we had that
when we had an RC and some that we included,
the GCC and China in Singapore were members of both
the CPTPP and our CP which are big mega free
trade deals. We're trying to convince the European Union, who
is also a flexy pro trade pro rules.
Speaker 3 (17:04):
Are they going to join? No, I think that's a
bridge too far.
Speaker 1 (17:07):
But can we get a partnership between the European Union
and the CPTPP, especially a CPTPP which is.
Speaker 2 (17:15):
Expanding, You've got to think we need a bit.
Speaker 3 (17:18):
I know, I know, In fact, I.
Speaker 2 (17:21):
Think that's why everyone talks about it, honestly.
Speaker 3 (17:23):
I know.
Speaker 1 (17:24):
But if it's strip aside the labels and the names,
I mean, the point is, is there benefit from globalization,
from efficiency, from interoperability, from standards, from peaceful resolution of disputes,
including trade disputes. The answer is unequivocally yes. But we
(17:45):
need to do it now and everyone needs to chip in.
So I think the EU is a natural partner with
the CPTP. So think of the EU and the Pacific.
Can we construct something that cuts a diagonal across go
and it's Africa keen on this. I think they are
South America. I mean, you may be surprised, even little Singapore.
(18:07):
We've signed free trade deals with Mercasol, which is Argentina, Brazil, Ecuador, Paraguay, Uruguay.
We've even signed a free trade agreement with the Pacific
Alliance Mexico, Colombia, Chile. So the point is you'll be surprised.
The appetite for economic integration remains, and that's what Singapore
(18:28):
is working now.
Speaker 3 (18:28):
Of course, I'll tell you, of course we are biased.
Speaker 1 (18:31):
This is Manhattan without upstate New York, or this is
one fifth of Rhode Island without continental United States, or
if you want another uncomfortable analogy, Singapore is just twice
the size of Gaza, but with three times the population.
So we're a tiny place in which our trade volume
is three times our GDP. So I hope you understand
(18:54):
when we promote free trade, it's lifeblood. It's not a
negotiating point, right, And when we say rules are better
than the alternative, because the alternative is right, it might
be it's beautiful and small. It's irrelevant. So I will
confess this is a self interested argument.
Speaker 2 (19:15):
But you've talked about importance of rules, but also a
country is working together.
Speaker 3 (19:20):
Yes, absolutely, not enforced.
Speaker 2 (19:21):
Should the Southeast Asian economies, even the Asian countries have
worked together more in negotiating these trade deals with the US.
You talk, No, I don't. I don't buy nactual arm
wrestling you describe.
Speaker 1 (19:31):
Yes, No, I don't think that was necessary, not certainly,
not at this stage. I mean, if you look at
Asian as a horse, you know the terris range from
ten percent, nineteen percent, maybe twenty percent, and those.
Speaker 3 (19:45):
Numbers keep changing.
Speaker 1 (19:47):
Anyway, my point is, don't overreact to the headline of
after Day.
Speaker 3 (19:54):
Understand what's going on.
Speaker 1 (19:56):
So if you now bring your zoom lens to Arcian,
have we systematically brought down our trade barriers non tariff barriers?
Speaker 3 (20:05):
Is RCN fulfilling its mission?
Speaker 1 (20:07):
Of becoming a single production zone, a single investment zone.
Has there been economic growth in URSA? What are the
prospects of RCN in the next two decades. We think
we can double our combined GDP. If you add up
the combined GDP of RCN, which by the way, has
a population slightly larger than the EU, we're about number five.
Speaker 3 (20:28):
And because half of population is.
Speaker 1 (20:30):
Below the age of thirty five and our middle class
is growing, the long term prospects are right. So long
as we don't overreact, we don't do stuff that actually
boomer ranks back on us. And we just look at
what we did this year. We upgraded the RCAN agreement
on trading goods within r CM, we upgraded the rc
(20:52):
and China Free Trade Agreement, and we're still looking at
building more more bridges across the world. So my point
is that in fact, Southeast Asia is a zone of
hope and growth.
Speaker 3 (21:05):
The key thing is to focus on.
Speaker 1 (21:09):
The long term. And what does long term mean? It
means technology. Bearing in mind that we've got three technological
revolutions going on in real time simultaneously, AI, biotech, renewable energy,
and we're focusing on building up the infrastructure for that.
With focusing on educating a workforce, work creaty for that
(21:30):
kind of work, the world of AI and robotics, and
we're focusing on integrating, we can still increase our intrascient
trades significantly. And what about Asian Africa, Asian South America.
You know, it's some people call it South South. I
don't really like term, but my point is there is
still a majority in favor of this. I would also
(21:52):
point out the CPTPP began as four tiny states Singapore, Bruna,
New Zealand and Chile, and it only became TPP when
America and Japan came in. Now we knew by the
time Hillary Clinton had to withdraw from her support from
(22:15):
the TPP, which in fact she had a lot to
do with starting, that the cause of free trade was
in political problem. And I think all of us in
this room, who I would say are probably instinctive free traders,
need to realize that we didn't make the political case
for it. And you have to convince your local electorate
(22:39):
the jobs and wages and opportunity come from free trade. Otherwise,
if you don't understand the political reality that for every
free trade agreement, they are winners and losers. You need
to put seat belts on. You need to have compensatory mechanisms.
And whilst you don't expect governments to choose winners and
(23:01):
losers at the enterprise level, but governments do need to
be activists infrastructure, education, pro enterprise regulatory environments.
Speaker 3 (23:13):
You do need an active government.
Speaker 1 (23:16):
But what you don't want is completely state directed capitalism
where you pick winners and lois. So we think that's
ultimately a dead end. So anyway, my point is, watch
this space. That's why there's still buzz in this part
of the world.
Speaker 2 (23:32):
We're going to run out of time. So I want
to just quickly ask you I started talking about the US.
I mean you have said obviously trade is the lifeblood
of Singapore, and you're absolutely at the center of looking this.
The one country that despite all these tariffs and trade
wars by the US, the one country that has managed
to increase its export growth this year's China. See that
(23:52):
country in many ways doubling down on a focus on manufacturing,
on export led growth, when many economists might have said
long term they have to be on a different path.
How destabilizing is that for this region, especially now they
have a slightly more well.
Speaker 1 (24:10):
I think what you're referring to you're being too delicate.
You're referring to over capacity. Actually, the world has had
unsustainable imbalances for some time. If you outsource all manufacturing
to China, you outsource all energy to Russia, and you
outsource security to America, I'm referring to the EU.
Speaker 3 (24:33):
That's not a sustainable model.
Speaker 1 (24:35):
And if the EU wants sort of strategic autonomy or independence,
it needs to get a grip on manufacturing, on its
industrial capacity, on its defense, and on its energy policies.
And I'm just giving you one example. In the case
of China, it's worth also reflecting because China became the
(24:56):
manufacturing center well and enjoying economies of skin. And by
the way, I must say, Chinese workers happened to be
really hard working and efficient. I don't think you can
follow China for that. But a world in which all
manufacturing is accumulating on one half, trade surpluses are accumulating there,
(25:18):
but those trade surplus are being recycled it used to
be recycled.
Speaker 3 (25:21):
Into T bills.
Speaker 1 (25:22):
What it meant is, for a while the Western consumer
enjoy low inflation, low interest rates, high quality.
Speaker 3 (25:30):
Goods at affordable rates.
Speaker 1 (25:32):
But actually we're consuming beyond what they were producing, and
we should not be surprised that this system based on
the imbalance was not sustainable. Now, if you imagine that
Americas shuts its market to the productive capacity of China
and the EU also follows suit I mean, and think
(25:53):
of automotives as an example.
Speaker 3 (25:56):
Then the question will be will China be able.
Speaker 1 (25:59):
To expand is domestic consumption to match its capacity or
will it still try to export its way? And if
it does, where will it export to?
Speaker 2 (26:11):
But that is what they do, right.
Speaker 3 (26:13):
No, I think.
Speaker 1 (26:14):
But I'm saying, let's, without being pejorative or making value judgments,
just ask yourself, do you need domestic changes to the
economic structure of China?
Speaker 3 (26:25):
I think we do.
Speaker 1 (26:27):
What does Southeast Asia, Africa and South America?
Speaker 3 (26:32):
One do we need infrastructure? We do?
Speaker 1 (26:34):
Is the productive capacity of China for the development of
that infrastructure, particularly green energy, AI and even biotech, which,
by the way, speaking as a doctor, the Chinese are
no slouches in that area too. So what I'm saying
is watch this space. I am sure adjustments will occur
(26:55):
both domestically and across borders. And across loads, and the
opportunity will be to try to catch these waves, catch
these new tides and wins so that we maximize opportunities
for the rest of us. So, don't you know, I'll
come back to the hopeful note in which you started.
Not all of us have lost our heads and reacted
(27:18):
in panic or even acted on sense of retribution. But
we've tried to take a longer term view of the
imbalances and of the trends, and to seek opportunities in
these interact names.
Speaker 3 (27:34):
Well, I think that's the basis of ourbitrage.
Speaker 2 (27:35):
For sixty years, things been fairly good at now.
Speaker 1 (27:37):
Now, but sixty years is you know, in Asia, sixty
years it's far too early to tell, So we never
take our survival for granted.
Speaker 2 (27:46):
Documentarish thank you so much for joining us and for
starting ourself on a hopeful footing.
Speaker 1 (27:51):
I hope, so, so don't lose your head, you know,
understand what's going on.
Speaker 3 (27:56):
Look for opportunities. There are opportunities.
Speaker 2 (28:09):
Thanks for listening to Trumpnomics from Bloomberg. It was hosted
by me Stephanie Flanders, and I was joined by Singapore's
Foreign Minister, Vivian Balachristian Trumponomics was produced by Samasadi and
Moses and with help from Amy Keen. Sound design was
by Blake Maples and Kelly Gary, and Sage Bowman is
Bloomberg's head of podcasts. To help Brothers find it, please
(28:31):
rate and review this podcast highly wherever you listen
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