DPM Heng Swee Keat at the 15th FutureChina Global Forum (FCGF) 2024

Mr Lee Yi Shyan, Chairman Business China, 
Board Members and the Business China team, 
Parliamentary colleagues,
Excellencies, 
Ladies and gentlemen,

Welcome to the FutureChina Global Forum, or FCGF 2024.

The FCGF was first convened in 2010 at the suggestion of then-SM Lee Kuan Yew, for our business community to have a deeper understanding of China’s economic development. 

As China’s economy grows, this platform has expanded, to bring business leaders and experts from around the world to share their perspectives. 

This 15th edition of the Forum is now one of the largest international China-focused platforms, with more than 700 attendees in-person, and even more online. I am glad to see good international representation, including Ambassadors and Business Chambers from around the world.

I congratulate Business China, and your partners on this achievement.

Today, the value of Business China is even greater, as China’s economy has grown in size and complexity, with extensive interlinkages around the world. It is fitting therefore to launch the refreshed Business China logo. 

In the digital age, this brand refresh will enable Business China to connect even better with our youths, business leaders, and enterprises, and deepen our understanding of China. 

In this age of contestation, Business China can serve as a neutral, trusted platform to deepen dialogue and understanding.

To set the context, let me first touch briefly on how globalisation has been evolving and what we can do in the coming years. 

Structural reform amidst receding globalisation

Specialisation and exchanges through trade have existed for centuries. These were initially peaceful, but the competition for raw materials and markets was one key reason which led to colonial domination, and even wars. 

After the second world war, the creation of multilateral agencies like the IMF and World Bank, and GATT which later evolved into the WTO, ushered in a period of global division of labour which promoted growth and development. A key reason for this is the strong economic complementarity between the developed economies and the developing economies. This complementarity allowed factors of production – land, labour and capital, to be used optimally, and uplifted many. 

At the same time, the Cold War between the US-led grouping and the USSR bifurcated the global trading system. With the fall of the Berlin Wall and the dissolution of the Soviet Union, as well as China’s reform and opening up in 1978 and subsequent entry into the WTO in 2001, global trade and investment expanded significantly. 

Globalisation benefited China, and uplifted hundreds of millions of people out of poverty. China, as well as many developing countries including Singapore, attracted capital from the first world economies – from the US, Europe and Japan. Consumers all over the world benefited from the entry of low wage workers, as they enjoyed a wider range of goods and services at lower cost.   

The strong economic complementarity benefited the vast majority of workers, consumers and businesses. Indeed, since the formation of the WTO, global trade has grown about six times, the global economy has tripled in size, and the global per capita GDP has doubled. 

But in recent years, while there is still much complementarity, competition has sharped in certain areas as developing economies, especially China, move up the value chain. 

China is closing the gap with developed economies. 

It has, for example, built thriving industries in sectors like advanced manufacturing, electric vehicles, solar panels and digital technologies, and AI. 

Because of the sheer size of China, it faces big development challenges. While the coastal region has developed rapidly, it still has much to do internally to develop the inland areas.   

In nominal terms, China is now the second largest economy in the world, and in PPP terms, the largest. Yet its per capita GDP at over US$12 000 is just one seventh that of the US which is over $83 000.  

But at the same time, industries that have caught up with those in the developed economies are posing very strong competition. Electric vehicles and solar panels are just some of the examples. 

The benefits and costs of globalisation are distributed asymmetrically. Most consumers in the US and around the world are benefiting from the lower cost and higher quality of goods, but they will not attribute this to globalisation. But globalisation also imposes sharp costs on a smaller number of workers who fell it acutely, when they who lose their jobs or business. 

Seeking to retain jobs, especially for older workers, and workers particularly in important electoral districts has led to protectionist measures. But this does not address the problem fundamentally – which is that for countries to benefit from globalisation, their economies have to undergo structural adjustments, to find new ways to complement and compete with other economies. Rather than engage in protectionism or economic conflict, structural adjustment is the better and longer-term solution to uplift our people and sustain the momentum for globalisation. 

Besides sharper competition from developing economies, developed economies are also facing rapid technological advancements in areas like automation, AI and biotech. But at the same time, the workforce in many of the developed economies are ageing, and their skills are at risk of obsolescence now. It is not easy to simply ask workers to adapt and reskill – promising to revive existing industries is a far more attractive political message.  

China’s role in the global economy

What can China do to continue its growth?

I believe the China’s leadership is fully aware of the challenges and the potential solutions. There are already a few policies that she has embarked on.

China is already the largest trading partner for many countries around the world, and export-led growth will be much more limited in the coming years. Instead, it is embarking on “dual circulation” to increase domestic consumption alongside international trade. 

I believe this is the right direction. 

But this will take time to implement fully, as it touches on many facets of the economy and society, including the Asian mindset of saving, and the need to design a stronger social safety net for 1.4 billion people. 

At the same time, it has to deal with the problems in the housing market and the municipal debt issues. Hence, the recent measures to stabilise growth are timely, including monetary fiscal stimulus, and pledges to these two areas. As we learn from the Japanese experience in the 1990s and the US subprime housing bubble, it will take time to correct these.

China also has to deal with the issue of rising inequality in both income and wealth, and it has to manage the trade and technological contestation. So more critically in the longer term, structural reforms are necessary for China to overcome the limitations of its previous growth models, and transition to more inclusive and sustainable growth model. Again, many of these are underway, including: raising the statutory retirement age for employees; reforming the education system to emphasise not just college degrees, but vocational skills and linking these more closely to the needs of the industries; developing new industrial sectors like solar energy, batteries, electric vehicles, and AI; emphasising science, technology, and innovation, or “New Productive Forces”; and encouraging Chinese entrepreneurs to internationalise, which will also help regional economies benefit from China's growth and development.

All economies go through cycles. We cannot avoid that. While China’s economy is going through a difficult patch, I trust that China will embark on difficult changes, and regain its growth path, to generate enough resources to deal with the many challenges it is already facing and will continue to face in the coming years.

A combination of resourceful Chinese officials and able entrepreneurs was key to how China came out of poverty. In the next phase of development, this will be even more important as China is no longer in the phase of catch-up growth but has to lead at the frontier.

In fact, not just China, but all economies around the world that must undertake structural adjustments to build new sources of competitive advantage and seek complementarities with other economies.

Economic development is both cooperative and competitive. For each economy to thrive, it needs to build distinctive competitive niches while cooperating with other economies to solve common challenges like climate change and pandemic risk and build up a robust rules-based framework.

In the coming years, science, technology and innovation will critically shape our future and our future society and economy. Europe and Japan have articulated Industry 4.0 and Society 5.0 respectively. In Singapore, we are investing significantly in this area, and we are seeking like-minded partners. We have set aside S$28 million for investments in science, research and innovation from 2021 - 2025.

During my overseas engagements, I see firsthand many exciting areas that will impact not only our economic competitiveness, but our personal well-being, and well-being of the planet. So for Singapore, we will need to position our economies for the digital and green age.

Realising Asia’s growth potential to benefit the world

Let me now turn to another theme in this year’s Forum - “Strengthening Collaborations in a Multi-polar World”.

Within Asia, we can and should continue to work together to realise Asia’s growth potential and enhance Asia’s linkages with the global community.

Today, there are still many developing countries in Asia where costs are low, and complementarities remain strong. The average GDP per capita in ASEAN is one tenth of the OECD.

These countries have good growth potential. The IMF estimates Asia will grow by 4.5% this year and contribute two thirds of global GDP growth.

India, and ASEAN countries like Philippines and Vietnam, are projected to grow even faster at over 6%.

To realise this growth potential, we need to build the “hard infrastructure” and improve connectivity, with support from the World Bank, Asia Development Bank, and China’s Belt and Road initiative.

We will also need to develop the “soft infrastructure” or human capital through education and training. This was a recurring theme during my recent visit to the UK and Japan, and in my meetings with other Asian leaders.

We need a multi-faceted global approach to advance skills development for the digital age and bring out the best in everyone. And we must continue to pursue regional economic integration and deepen our cooperation.

In fact, ASEAN is building not only the ASEAN Economic Community, but ASEAN as a group now has FTAs China, Japan, India, Korea and Australia-New Zealand. 

Fifteen economies in the Asia Pacific, including most of ASEAN, Australia, New Zealand, Japan, S Korea and China have signed on the Regional Comprehensive Economic Partnership or RCEP.

I am heartened that discussions to upgrade the ASEAN-China FTA are near completion, and work is underway to complete the ASEAN Digital Economy Framework Agreement by next year. 

Conclusion

To sum up, I have a brief overview of the developments of the global economy, and how the economies in China, Singapore and ASEAN have been growing. 

Singapore’s experience is that free trade and economic integration are key to greater prosperity. Ideally, trade liberalisation and economic integration at the global level will serve all countries best.

But given the difficulties that we are seeing from globalisation, we also need to keep up the momentum of trade liberalisation with like-minded countries, by pursuing bilateral and regional free trade agreements. These agreements should be open to those who wish to join later, so that we can expand our markets We must also reskill our workers so that nobody is left behind.

A particular area that we need to focus on in the coming years is to build up deeper science, technology and innovation capacity. Again, this has to be done within each country, while seeking opportunities for broader regional and global cooperation. We will need to develop our competitive strengths for the digital age, and to do it sustainably to support the UN Sustainable Development Goals to address the wicked problem of climate change.

I hope that in this 15th edition of the FutureChina Global Forum, all of you will share your perspectives, take a longer-term strategic view of developments, and then take practical steps to work towards a better future not for ourselves but for the world. I wish you fruitful discussions.

Thank you.