How to Walk the Tightrope in a Multi-polar World

Singapore: Walking the Tech Tightrope

An Arab proverb wisely says: He who speaks about the future lies even when he tells the truth. This proverb is absolutely right. The future is always unpredictable.

PROF KISHORE MAHBUBANI

Distinguished Fellow, Asia Research Institute, National University of Singapore Author, The Asian 21st Century and Has China Won?

Yet, in geopolitics, the future can also be predictable. Hence, it’s certain that over the next decade or two, the geopolitical contest that has already begun between the US and China will accelerate. Why am I certain?

THE ONGOING GEOPOLITICAL CONTEST

As I explain in my book, Has China Won?, the world’s number one power (today, the US) always tries to push down the world’s number two power (today, China) when the number two power is about to overtake it. In nominal market terms, China’s GDP is projected to become bigger than that of the US over the next decade or two. And actually, in purchasing power parity (PPP) terms, China’s GDP became bigger than the US’ in 2016.

It’s vital to emphasise here that this geopolitical logic is cold and ruthless and has nothing to do with personalities. Trump launched the geopolitical contest against China when he unleashed the trade war against China in 2018. Trump is gone. Joe Biden, who replaced him, is a much nicer guy. Yet nothing changed. Biden said in 2019: “President Trump may think he’s being tough on China. All that he’s delivered as a consequence of that is American farmers, manufacturers and consumers losing and paying more.” However, he hasn’t removed any of Trump’s tariffs on Chinese products since taking office. He would be politically crucified in the US if he did so. That’s how strong the anti-China consensus has become in the American body politic.

And this geopolitical contest has nothing to do with ideology or values, even though the Biden Administration officials say that this is a contest between “Democracies and Autocracies”. During his State of the Union Address on March 1, 2022, President Biden said: “In the battle between democracy and autocracy, democracies are rising to the moment”.1 Yet, even though the US claims to only cooperate with democracies, it doesn’t hesitate to cooperate with autocracies like Saudi Arabia or Vietnam if it has to. Interests always trump values in geopolitical contests.

THE SPILLOVER CAUSALITY EFFECT

All Singaporean firms, especially in the tech sector, should therefore watch what is happening in this geopolitical contest closely as they could easily get caught in the crossfire. It’s clear that the US will try to stop China’s rise by trying to either reduce its pace of technological development or by denying it access to advanced American technology, such as semiconductor chips. Many in the US also believe that one way for the US to stop the rise of China is to “decouple” the US and Chinese economies. Hence, we can expect the US to mete out harsh economic measures against China from time to time.

Even close allies of the US will not be spared if they violate American policies. I learnt this first-hand from speaking to a senior British official in Davos in January 2020, just before COVID-19 broke out. He assured me that the UK would proceed with using Huawei equipment in its 5G networks since British GCHQ officials had been “planted” in Huawei offices to “scrub” Huawei technology. This same British official also said that the UK would never capitulate to American political pressure to keep Huawei out of the UK. Yet, exactly six months after our conversation, the UK capitulated. On 14 July 2020, UK Culture Secretary Oliver Dowden announced that UK network operators would no longer be allowed to buy Huawei equipment by the end of that year, and that they would have to remove existing Huawei equipment by 2027. Dowden estimated that the Huawei ban would cost the UK two billion pounds.

If a powerful country like the UK is forced to capitulate to American pressures on technological dealings or cooperation with China, it is understandable why smaller countries will have to be even more careful. Huawei is one good example of how the US is applying pressure on China in the tech space. Another is to deny China access to the most advanced semiconductor chips. The US is doing this in two ways. In March 2022, Washington, DC asked Japan, South Korea and Taiwan to join it in forming the Chip 4 Alliance, with the purported aim of excluding China from the chip-making global value chain. Secondly, the US Congress passed the US$280 billion Chips and Science Act in August 2022. A core goal of this bill was to boost semiconductor manufacturing in the US. All these measures have one goal: to stop China from catching up with the US in advanced computer technology, especially in chips.

Will these measures succeed? Will they stop China’s development? Only time will tell. The record shows that it’s difficult to stop China’s technological development. For example, in 2011, the US passed the Wolf Amendment, which prohibited NASA from using federal funds to cooperate with China and China-affiliated organisations. Yet, despite this, China made spectacular advances in outer space exploration, reaching both the dark side of the moon and Mars. Hence, the American measures to stop China in chip manufacturing could also fail.

SWEET SPOT FOR BALANCING ON A SLACKLINE

Fortunately, the Singapore government has made it clear that it will not take sides in this accelerating US-China geopolitical contest. Singapore wants to be friends with both. In a BBC interview on 14 March 2021, Prime Minister Lee Hsien Loong said that “It is not possible for us to choose one or the other because we have very intense and extensive ties with both the US and China, economic as well as in other areas, and so do many other countries in the world.”2

Similarly, Singapore tech firms should not take sides, and learn to walk the current diplomatic tightrope between US and China carefully by establishing good relations with both their US and Chinese counterparts. At the same time, they should be acutely aware of sanctions that US and China have imposed on each other. Singapore firms should not violate these sanctions – or they risk getting caught in the crossfire. Follow the news carefully, and be very careful when this tightrope begins to move erratically. Good luck!

1 The White House, “Remarks of President Joe Biden - State of the Union Address as prepared for delivery,” 1 March 2022, https://www.whitehouse.gov/briefing-room/speeches-remarks/2022/03/01/remarks-of-president-joe-biden-state-of-the-union-address-as-delivered/. 2 Prime Minister’s Office Singapore, “PM Lee Hsien Loong’s interview with BBC for Talking Business Asia,” 14 March 2021, https://www.pmo.gov.sg/Newsroom/PM-interview-with-BBC-for-Talking-Business-Asia.