SINGAPORE — The ongoing trade war, which is also being fought on the technological front, could result in Singapore having to decide which telecommunications system to install and Singaporeans needing to carry multiple phones overseas.

This could play out as the United States and China are not allowed to leverage each other’s technology, which means they will have to develop their own microchips, smartphones and telecommunications systems.

Prime Minister Lee Hsien Loong painted this scenario as he laid out the implications of US-China tensions at the National Day Rally on Sunday (Aug 18).

The tussle between the superpowers will have an adverse impact on the world economy by disrupting supply chains, restricting investments and research and development, and constraining people-to-people exchanges, he said.

In his speech in Mandarin, Mr Lee reiterated that the escalating trade war has placed other countries in a dilemma, but no one, including Singapore, wants to take sides.

While the US has to strive for constructive bilateral ties with China and recognise that stopping the Asian giant's rise is “neither possible nor wise”, Mr Lee said that China as a global power “must put itself in other countries’ shoes, and take into account their interests and views”.

“Regrettably and worryingly so, both China and the US have yet to find the magic pill to manage their differences,” he said. “Their tensions will not be resolved in the near term and this will impact the whole world order.”

IMPACT ON SINGAPORE'S ECONOMY

Amid the escalating trade row, Singapore’s economic growth will be hit, and its future will be a “more troubled one”, Mr Lee said. Singapore firms exporting to China, as well as those with factories there and exporting to the US, will be affected.

There are some people who believe that companies deciding not to manufacture in China may come to Singapore. But that is not the case, the prime minister said. Such companies are more likely to go to countries with a much lower cost base than Singapore's or those closer to major markets.

For instance, Mr Lee said clothing manufacturers would likely move factories to Vietnam and Bangladesh. Electronics firms will likely set up operations in Mexico. The same goes for furniture manufacturers, which will likely relocate to the Philippines.

“These industries will not move to Singapore. Overall, should US-China relations continue to deteriorate, it is bad news for Singapore,” he added.

The trade war has also spread to the technological scene. Among the punitive measures that the US has imposed on its rival, it has placed Chinese telecommunications-equipment giant Huawei on an export blacklist, citing concerns that the firm's devices could be used by China to spy on Americans. 

Mr Lee said the smartphones that Singaporeans use contain many components designed, manufactured and assembled in various countries. This is the case for Apple and Huawei phones.

But if the US does not allow its companies to use China-made components or sell microchips to China, Mr Lee noted that American and Chinese firms would then have to develop their own components, microchips, smartphones and telecommunications systems.

What does that mean for Singaporeans? They may have to carry multiple phones, as some did before when they visited Japan. At that time, Japan used the Code Division Multiple Access phone network, whereas Singapore used the Global System for Mobile Communications, Mr Lee noted.

“In such a bifurcated world, we still hope to be able to communicate with all our friends conveniently. So, our bigger headache is: Which telecommunication system should we install in Singapore? Should we install the Chinese one or the American one?” asked Mr Lee.

NOT TAKING SIDES

Singapore is “good friends” with the US and China, said Mr Lee, and it wants the relationships to remain so.

Singapore’s relations with China, in particular, are unique since there is a shared heritage and culture, which Mr Lee said deepens people-to-people ties and cultural exchanges. He added that aside from China, Singapore is the only sovereign country in the world with a majority ethnic-Chinese population.

Notwithstanding the close co-operation, he stressed that “we should always remember that we are Singaporean”. “We have our own history and culture, and also our own perspectives and political stands on current affairs," he added. 

Being majority-Chinese “can at times put us in a difficult position, because our words and actions may be easily misunderstood”, said Mr Lee, especially when the US and China are at odds.

If Singapore supports China, the US and other countries may think it does so because it is a majority-Chinese country and, therefore, “accedes” to China, he said.

“But if we support the US, China may also misunderstand. In fact, on occasions when Singapore and China have held different views in the past, some of our friends from China have asked us: Since we share a common language, a common ancestry and a common heritage, why does Singapore not share a common view?” Mr Lee added. 

Ultimately, Singapore “must always be principled in its approach and not be swayed by emotions”. 

“When we can agree with either major power, we will do so. When we cannot, we must maintain and explain our stand,” said Mr Lee.