There is no win-win situation in a fragmented world

Singapore will not take sides in geopolitical conflicts and will take a position that supports the rule of law, Education Minister Chan Chun Sing said in his keynote speech at the Morgan Stanley Asia Pacific summit in Singapore on Wednesday.

He argued that the world should remain interdependent despite pressure to break it up, as any scarring would make individual countries “suboptimal” and suffer economically.

“With interdependence comes risk, but a fragmented world with less interdependence, where people and major countries believe that they can improve their security, and indirectly hurt the insecurities of other countries, it cannot be a win-win situation,” said Chan.

“Global businesses have a voice and must make their voice heard, that you prefer an integrated world, not a fragmented world,” said Singapore’s Education Minister Chan Chun Sing (pictured here in 2019).

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“It is important to remember that a more interdependent world is a safer world. But now, due to pressure, both domestic and global, there is a temptation to think that if the world fragments, two different blocs, each of them a different bloc. be safer.”

Chan said if fragmentation continues, the country and companies will do less than optimally, “instead of … enjoying the last 50 years of rapid growth based on a global integrated system.”

In recent months when Russia moved to Ukraine, we objected to it. People ask, is this a pro-US movement? Or is it an anti-Russian or anti-Chinese move? It’s not.

Chan Chun Sing

Minister of Education Singapore

Now, the international security system based on rules and trade order is once again “coming under strain” and cannot “take it for granted,” he added, citing the example of the Cold War.

He cited the Russian war in Ukraine and World Trade Organization dispute settlement crisis as some cracks in the system.

Speaking directly to business leaders and investors at an investment conference, Chan called for global integration.

“Global businesses have a voice and should hear their voice, that you prefer an integrated world, not a fragmented world,” Chan said.

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He said Singapore would also play its part by connecting and “interoperating” across blocs.

“We believe there will be a premium for connectivity, stability, progress, cohesion, and trust,” added Chan.

Fragmentation is starting to undermine the stability of the global economy, Morgan Stanley Investment Management said in a separate note on Wednesday.

Deglobalization and the disruption of supply chains, for example, are fueling inflation, said Andrew Harmstone, a senior portfolio manager at the firm.

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“World trade as a percentage of GDP has been going up very fast in the past, which contributed to a very low rate of inflation. But the trend towards reshoring will tend to reduce trade,” he said.

According to the Hinrich Foundationalthough terms like “friend-shoring” have been added to the lexicon of trade policies of the US and other countries like Japan, little has been revealed about what they mean.

“If governments are looking to intervene in the supply chain, they need to make sure they observe the risks better than companies. said Halit Harput, author of the Hinrich report.

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