De-globalization is not an option for any of us, says German Chancellor Olaf Scholz

German Chancellor Olaf Scholz and Singaporean Deputy Prime Minister Lawrence Wong have taken a united stance to continue working with China, but also remain committed to diversification.

Scholz, who was attending the Asia-Pacific German Business Conference in person for the first time, told a packed house in Singapore on Monday that economies needed to deepen free trade in the face of geopolitical tensions and not turn to protectionism. .

“Free and fair trade benefits all parties involved. It remains the foundation of our prosperity,” he said.

Scholz said Germany wants to deepen economic ties with Asia-Pacific, not just China, in line with pursuing trade diversification.

But diversification, Scholz said, is not decoupling and understanding this is crucial at a time when concepts such as “nearshoring”, de-globalization and self-sufficiency are gaining traction.

“A lot of times it’s just protectionism in disguise,” Scholz said.

“De-globalization is not an option for any of us.”

New research from the Hinrich Foundation While terms like “friend-shoring” have been added to the trade policy lexicon of the United States and those of other countries like Japan, little has been revealed about their meaning.

“If governments seek to intervene in a supply chain, they must argue that they observe risks better than companies. But it is unclear what market failure friend-shoring policies will address without fragmenting more the world trading system”, author Halit Harput said.

Scholz also said that challenges such as climate change and food insecurity can only be solved through innovation and competition manifested through trade.

Nearly 600 top German and regional Asia-Pacific leaders were on hand for Scholz’s keynote address at the region’s premier business event for German companies. It was one of only two stops between the chancellor’s trip to Beijing last week and the G-20 leaders meeting in Bali, Indonesia this week.

Scholz also visited Vietnam.

When asked how German companies should approach both competition and collaboration with China, Scholz said Germany could deal with China if it was able to diversify its economy and supply chains. .

Scholz used the example of Germany to strengthen its semiconductor, artificial intelligence and battery industries. In these areas, China is both a competitor and a supplier.

germany dependence on China for goods, especially key materialshas come under scrutiny.

Wong, from Singapore, said the United States and China both have broad interests across Asia and need to find a way to coexist, compete and cooperate peacefully.

“So from Singapore’s point of view, we encourage better diversification. We are all for greater resilience, but we will caution against rules that would lead us to a more fragmented world, because that will leave us all in a situation worse,” Wong said. after Scholz’s speech on Monday.

But even though the United States and China are “the most important”, Wong said, many economies, including Singapore, have the agency to shape development in their own regions – and most will lean towards greater globalization. , Not less.

“The reality is that we are moving towards a multipolar world, characterized by a great diversity of overlapping interests,” he said.

“Germany does not want to dissociate itself from China, which remains an important trade and commercial partner for Germany and Europe. And this is also the view of Singapore and that of many ASEAN countries. .”

“And within ASEAN, no country wants to be able to have both sides between China and the United States. There can’t be a good outcome for us if our countries were forced into two sides, a hard line or worse even a wall in between.”

And to stay open, all countries must be free to continue participating in the region’s economic playground, he added.

As part of the conference, Singapore and Germany, Singapore’s fourth largest services trading partner in the EU, signed a new Memorandum of Understanding, the Germany-Singapore Framework for Sustainability and Innovation.

Speaking on a separate panel after Scholz and Wong, the dean of Oxford University’s Blavatnik School of Government, Ngaire Woods, said the G-20 meeting in Bali this week would be crucial.

Drawing on speeches by Scholz and Wong, Woods urged the leaders of major countries like Germany to hold the United States and China accountable for their commitment to global cooperation.

“In doing so, they must counterbalance the inner strength in China and the United States that pushes them toward an increasingly nationalistic ‘America First’ or in China a ‘self-reliance’ approach to global cooperation.”

“We need them not to bring a new deal to the World Trade Organization, but to keep it working, to enforce the rules.”