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SE Asian leaders warn of economic cost of US, China rivalry

BOAO, CHINA - MARCH 30: Media staff watch a screen showing live broadcast of Singapore's Prime Minister Lee Hsien Loong speaking at the opening plenary of the Boao Forum for Asia Annual Conference 2023 on March 30, 2023 in Boao, Qionghai City, Hainan Province of China. (Photo by VCG/VCG via Getty Images)
BOAO, CHINA - MARCH 30: Media staff watch a screen showing live broadcast of Singapore's Prime Minister Lee Hsien Loong speaking at the opening plenary of the Boao Forum for Asia Annual Conference 2023 on March 30, 2023 in Boao, Qionghai City, Hainan Province of China. (Photo by VCG/VCG via Getty Images) (VCG via Getty Images)

By Philip J. Heijmans

(Bloomberg) — Southeast Asian leaders warned against the economic cost of the growing US and China rivalry during a big ticket forum in Hainan on Thursday (30 March), and urged the two sides to cooperate to avoid further bifurcation that would be felt across global markets.

Addressing high-profile delegates at the Boao forum, Singapore Prime Minister Lee Hsien Loong said the two sides should stabilize ties while any clash between the super powers would have “grievous consequences for themselves and the world.”

“Economic imperatives are being overshadowed by national security concerns,” he said. “Countries are pursuing self reliance and resilience by onshoring, or friend-shoring, their supply chains. The bifurcation in technological and economic systems is deepening and this will impose a huge economic cost on countries as well as further exacerbate rivalries.”

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Southeast Asia has tried to navigate the middle path between the US and China — a role that has become increasingly difficult as the two powers tussle on everything from semiconductors to Taiwan. While those countries rely on Beijing as a major economic partner, they also depend on the US as a security partner at a time China has continued to grow its military prowess.

Singapore has become increasingly vocal over the rising tensions, with its foreign minister previously saying the relationship between the two global powers has gotten so bad the stage is “almost pre-set” for an accident akin to the events precipitating World War I. Lee recently sounded the alarm during an interview with Chinese broadcaster CCTV, saying “the world cannot afford a conflict between China and the rest of the world, and in particular between China and the US.”

The trip to China is Lee’s first since the pandemic with the scheduled itinerary including a meeting with President Xi Jinping in Beijing. He’s also scheduled to meet other high ranking figures of the Communist Party. The Boao forum was also attended by Malaysian Prime Minister Anwar Ibrahim.

During his remarks, Anwar underscored the potential for rivalries in the semiconductor industry to “take either a productive or a destructive turn” and urged spirited collaboration between nations without mentioning either China or the US by name. He further said technological competition should become a principal agenda item for discussion “right up there with discourses on security and general economic matters.”

“On the one hand, we need to recognize that countries will always seek to protect their intellectual property rights and try to stay ahead of the competition,” he said. “On the other hand, we need to establish certain guardrails so that the competition does not lead to a bifurcation in the technological world, one that will only raise costs and impede further progress.”

A string of crises in recent months has given rise to increasingly aggressive rhetoric between the US and China as the Biden administration organizes allies to help stop Beijing from further developing its own chip industry and advancing its military capabilities. Bilateral relations hit another low point this year after the US shot down an alleged Chinese spy balloon, and after officials said Beijing was considering providing lethal aid to Moscow for its war in Ukraine.

“We hope that China and the United States will succeed in stabilizing their relationship and establishing mutual trust and respect to cooperate in areas where their interests are aligned,” Lee said on Thursday. “The world feels the impact of these tensions keenly.”

©2023 Bloomberg L.P.