Singapore PM warns of regional fallout from US-China tensions

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Singapore’s prime minister has warned that rising tensions between the United States and China will impact the city-state’s economy and the region as a whole.

Lawrence Wong, who took office in May, said in his national address on Sunday that “increasing rivalry” between Washington and Beijing was Singapore’s biggest geopolitical concern.

“Mutual distrust and suspicion will continue,” affecting trade, security and international cooperation, he said. “As a small country that is completely dependent on trade and a stable global environment, we will certainly be affected.”

SingaporeAccording to the World Bank, Vietnam’s trade-to-GDP ratio will reach 311% by 2023, one of the highest in the world.

Wong said that regardless of who wins the US presidential election in November, “it is clear that the US attitude towards China is getting tougher. Meanwhile, China believes that the US is trying to contain and prevent its rise.” Both the Trump and Biden administrations have raised tariffs on Chinese products, and Beijing has responded with countermeasures.

The United States offers many Singapore’s military capabilitieswhile China is the city-state’s largest trading partner. Maintaining good relations with both is a priority for Singapore, but also an increasing challenge.

Wong also warned of a changing global manufacturing map. Where developed countries once outsourced production to cheaper locations in Asia, “that era is over,” he said, noting that the United States, China and European countries want to reshape supply chains in their favor.

The US and the EU are both looking to reduce their dependence on Chinese supply chains, supporting near shore strategy: according to the US Department of Commerce, in 2023, the US bought more goods from Mexico than China for the first time in 20 years.

Singapore, the world largest transit hubhas yet to see an impact on its own role in trade — total container volumes in the first five months of the year were up 7.7 percent year-on-year, according to the Maritime and Port Authority of Singapore — but the country is potentially vulnerable to supply chain restructuring.

The National Day speech is considered the country’s most important annual political event, often accompanied by domestic policy initiatives. Not only will it be Wong’s first speech as prime minister, it will also likely be his last before Singapore holds a general election, which must take place by November 2025 but is expected to be held earlier.

Speaking in Malay, Mandarin and English, Wong focused on policies related to education, family and public housing. He stressed the need to maintain cohesion and financial inclusion of Singapore’s multi-ethnic population.

“We have seen what happens in other countries when the middle class falls behind: societies start to break down and collapse,” he said. “Don’t assume it can’t happen here. It can happen.”