China Plus One: Rethinking ASEAN'S role in global trade

AWANI

As global power dynamics shift, what should a resilient ASEAN look like? Danny Quah, Li Ka Shing Professor in Economics at the Lee Kuan Yew School of Public Policy says it’s time to rebuild a rules-based order with or without the U.S.

Transcript

00:00With global power dynamics shifting and the U.S. commitment to multilateralism in question,

00:06what should a resilient ASEAN look like?

00:09Professor Danny Kua from the Lee Kuan Yew School of Public Policy at the National University of Singapore

00:14says it's time for the region to rebuild a rules-based order with or without America.

00:22If the system is being disrupted because the United States feels that it needs to withdraw

00:28from the multilateral rules-based order, the rest of the world, including ASEAN,

00:34will have to try and recreate that.

00:36I think there's a way to think about it in terms of something called pathfinder multilateralism.

00:42So what ASEAN, Malaysia, needs to do is to think about how it can recreate a rules-based order

00:49for which there is a level playing field that allows international trade to occur,

00:55for which there is a commitment to peaceful dispute resolution.

01:02It is possible to do that even without the United States.

01:06That's the kind of model that I think Malaysia and ASEAN needs to go towards.

01:11We need to be forensic in our thinking on this.

01:15When we say that America has disrupted the system, what we might be thinking is that it's

01:23trying to undermine the system for everyone else, or it's simply withdrawing.

01:28My view is the second is correct.

01:31It is simply withdrawing.

01:33We must not be confused into thinking that it's trying to disturb the rest of us.

01:38We need to proceed as if it's not here.

01:40And there's actually evidence that it's quite happy with that.

01:45When America withdrew from TPP, the Trans-Pacific Partnership, that system was left in tatters.

01:54But Japan and other nation states continued with it and built something called CPTPP.

02:00And America said absolutely nothing about it.

02:02So we should feel confident that we can rebuild a rules-based multilateral order without the United States in our region.

02:11As geopolitical tensions grow, diversifying supply chains may bring long-term benefits,

02:17but only if it is done for the right reasons.

02:20The fact that all the rest of us have been shocked into thinking about a China plus one strategy could be a good thing.

02:29We have become too complacent.

02:30We have to remember that the entire supply chain, the system of international trade,

02:36is meant to bring about good things for us.

02:39The things that we need now most are control over runaway cost of living.

02:47We cannot get by, people will be thrown back into poverty, if the cost of living rises too high.

02:54A second reason we should be thinking about rewiring the supply chain or China plus one strategy is if by doing that,

03:03we have access to better technology.

03:06The old way of doing things was a way that burned hydrocarbons,

03:10and that was frying our planet to a crisp through environmental change.

03:15If America's shock to the system makes us think about a China plus one strategy that helps us reduce cost of living

03:24and helps us improve our technology, then we should welcome it.

03:28And there's actually a good reason to think that we should be doing this.

03:33The bottom 50% of China's population has seen its incomes increase 600% in the last two decades.

03:43Costs of operating in China are rising.

03:46We should be thinking about diversifying to other parts of the world where cost of living, wages, are still under control.

03:55Having said that, there's actually also a bad reason for trying to go to China plus one.

04:02And that is if we think that by doing China plus one,

04:06we can console and appease the United States in its geopolitical conflict with China.

04:14I think that's a bad reason for doing China plus one.

04:18We are simply doing chain washing.

04:21We're trying to take products from China that America does not want to be sold in the world,

04:26and we're rebranding it.

04:28That's a terrible way to do business.

04:31And if we try and do chain washing through China plus one,

04:34not only is it a bad thing, it makes things more expensive, it's bound to fail.

04:41America will find this out quickly enough.

04:43But the more important point here is that if America has a problem with trade with China,

04:50that problem with trade is not China's alone.

04:54America is aggrieved at the entire international trading system.

04:59Liberation Day tariffs were not directed at just China.

05:02They were directed at everyone, including America's friends, Canada, Mexico,

05:07the United Kingdom, Singapore, Malaysia.

05:09So, America has challenges dealing with international trade,

05:14and we should not be thinking about a China plus one strategy

05:17as simply a cheap way to do chain washing that helps appease the United States.

05:23in the United States.

05:24So, these are areas of China which means that минут

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