SHANGHAI: A full-scale trade war between China and the United States will have a larger impact on the trust and confidence between countries than on actual trade, said Prime Minister Lee Hsien Loong on Thursday (Apr 12).

PM Lee was speaking to reporters at the sidelines of the DBS Asian Insights Conference in Shanghai, where he participated in a dialogue and touched on the heightened trade tensions between China and the US, Singapore’s position on being an interpreter of China as well as the fourth generation of Singaporean leaders.



On the impact a potential trade war might have on Singapore, Mr Lee said that the numerical impact in terms of trade volume and trade tariffs can be estimated and “probably is not enormous”.

However, the indirect impact on bilateral trust and confidence between China and America, as well as confidence in a multilateral trading system which all countries depend on will be greatly affected.

“In terms of the difficulty they will have cooperating in so many different areas where the world depends on them cooperating, in terms of the awkwardness and the sourness in the relationship which would make it very difficult for all the countries in Asia who are trying very hard to become friends with both, or stay friends with both,” Mr Lee said.



"The trust, mutual willingness to cooperate, which you must have if you are dealing with North Korea, you must be able to talk to one another ... If you are dealing with climate change, if you are dealing with extremist terrorism and if intelligence agencies want to share information or have to deal with live situations because some attack is being planned, they need to respond in real-time, they must have that confidence," Mr Lee said.



“In terms of the impact on the global security of the international system, I think going down this route is clearly very much the wrong thing to do. We can’t quantify the impact on us, we know that it means we are in for a more uncertain time. It means we have to be prepared psychologically,” he added.



While ASEAN countries might stand to benefit from the stand-off between the United States and China with manufacturing moving to Southeast Asia, these will be "a few consolation crumbs" and will not make up for the "big, contentious negatives".

Mr Lee added that insights gleaned from his meetings with Chinese leaders during his five-day visit to China show that they do not want to escalate tensions and are “trying their best to think through how this can be resolved”.

He had met Chinese President Xi Jinping, Premier Li Keqiang and Vice President Wang Qishan during the trip.

Publicly and privately, the Chinese have maintained their position in diffusing the issue, Mr Lee said.

In terms of the role that Singapore will play moving forward between China and the United States, Mr Lee said that Singapore “cannot be a bridge” and that Singapore “has no role in this”.

“The countries have their own links. They have many links, they have many opportunities to talk to one another, and they do not lack for contact. What they need to do is to be able to establish trust and be able to have the direct candid discussion of what their concerns are, what their problems are, as each side perceives them and what can be done about it,” Mr Lee said.

What Singapore can do, however, is to express its views, Mr Lee said.

“Where it is helpful, we can tell how things are as we see them, and we hope that our perceptions will be taken as being given in good faith and will be found to be helpful,” he added.

On engaging China’s new leaders, Mr Lee said that that the younger ministers are leading the engagement in many of the provinces such as Zhejiang, Guangdong, Jiangsu and Chongqing.

Accompanying Mr Lee on this trip are Foreign Minister Vivian Balakrishnan, National Development Minister Lawrence Wong, Minister for Education (Higher Education and Skills) Ong Ye Kung and Senior Parliamentary Secretary for Education Faishal Ibrahim.

“When we have the opportunity like on this trip, I bring the younger ministers along and they meet their counterparts and they get to know one another, and progressively get a feel for the relationship. Most important, the other side gets a feel for our younger leaders, what they are like, how they can do business together one day,” he said.

“These are things which take time. I mean, every generation, we have to establish contact,” he added.

Earlier at the dialogue, Mr Lee said progress has been made in identifying the next prime minister.

He stressed that whoever the person is, it would be very unrealistic to expect him to be able to do everything and it will require a team effort.

"Nobody can fulfill all criteria. What's more important is the team, and to fulfill the criteria between the team members. We will not be able to find a person who can do everything because that's very unrealistic. We need to find a capable team who can work closely together, who can inspire people's confidence and lead them, solve problems, carve out a new path and make Singaporeans proud," he said.