Prime Minister Lee Hsien Loong (PM Lee) was recently interviewed by Christiane Amanpour for CNN on why the US is running an overall trade imbalance, and Singapore’s position when two trade giants have difficulties with each other.
PM Lee first took some time to establish in simple English why Donald Trump wants to address the trade deficit between US and China.
Donald Trump’s starting point is that he has a big trade deficit … between US and China and that’s a bad thing and he wants to fix that.
He wants the Chinese to open up and buy more from America.
How did the US trade deficit happen?
PM Lee goes on:
And if you’re spending more than you’re producing, that means you will have a trade deficit.
If you’re spending less than you’re producing, that means you will save money and will run a trade surplus.
So America is spending more than you’re producing.
Why are you able to do that?
Because you’re the most powerful country in the world and everybody else wants to hold US dollars.
So it gives you an expensive, an exorbitant privilege as somebody called it.
You have to look at it at a more fundamental level, why is America running an overall imbalance? And it’s not mainly because of trade restrictions.
Why is trump addressing the trade deficit?
There’s another layer to this, which is that China entered the WTO in 2001 … at that time when it (China) was 4% of the world’s GDP.
Today, it’s (China is) 15% of the world’s GDP.
So what was agreed then with quite a small player is now in effect, with a very big player.
And what was politically wearable then, may or may not be politically wearable now, and therefore there is a case to say, let’s talk, let’s work out a new basis.
What could Trump have done better?
But I think when you talk over trade issues like this, it’s much better to talk in a multilateral framework.
And there’s a WTO, there’s a basis for many countries to come together, to work in accordance with international rules, rules which give space for all countries big and small, to operate under the same framework, which may not be the case if America just goes with China.
Singapore’s position when elephants fight
Amanpour then asks: You have to balance your relationship with US and China. How difficult does it get for Singapore when the US and China have increasing difficulties?
PM Lee replied:
We have to be on our toes, we are friends with both, we’d like to continue to be friends with both and it’s easiest for us to do that when the two have good relations.
When the two have tensions between them and there’s a feeling that you’re either with me or against me, well then it becomes harder, but we will keep on trying.
What did netizens think about PM Lee Hsien Loong?
See the full convo and comments below: