PM's interview with CNBC
Era of over-reliance on the US as the world's customer not sustainable
Jeremy Au Yong, Straits Times 28 Feb 09;
THE United States can no longer be the world's customer, said Prime Minister Lee Hsien Loong as he pointed to the need for a rebalancing of how the global economy and countries operated.
In an interview with the CNBC channel aired last night, he acknowledged that this could mean a shift away from Asia's current export-driven model.
As consumption in the US comes down, Asia will have to take up the slack.
'There will have to be a global rebalancing because we cannot expect the Americans to be consumers of things made all over the world. And the rest of the world as savers, lending money to the US to buy things from you,' he said.
But he said that this shift would be difficult given the large, structural changes that have to be made. 'I mean we can't just tell households: 'Go and spend more money', because they have their needs now, their needs in the future,' he said on the programme, CNBC Conversations.
'When they grow old they need to save. They need to save for their retirement, what to save it in. And these are structural and life-cycle matters which have to be taken into account.'
On top of that, some small countries like Singapore simply had no way of moving away from an export-driven model.
Domestic consumption here, said PM Lee, was too small to take in everything that was produced locally.
'We are part of the world economy. We make chips, we make pharmaceuticals, we make petrochemicals. We consume maybe 1 per cent of what we make in these things. Probably less,' he said.
'We are making for the world. We buy from the world, we make from the world, for the world...That's how we prosper. That's how the global economy prospers.'
His remarks drove home again just how much work is still left to be done before the world can emerge from the grips of the current downturn.
And PM Lee made clear that at home, the Government was prepared to do its best to 'minimise the damage' to Singapore's economy, even if it meant dipping into the reserves again.
'We've had a very big Budget ... And if we need to do more we will do more. We have the resources, we can do it. But it is not a problem where spending the money will cure you,' he said.
During the wide-ranging interview, he also responded to questions on issues such as the planned Asean Economic Community, and US-China ties.
Asked if the current crisis could derail plans for an economic community by 2015, PM Lee said it had the potential to do so.
But he stressed that even if the grouping achieved only three-quarters of what had been laid out in its roadmap, Asean would be much better off than it is today.
PM Lee is currently in Thailand attending the Asean Summit.
As for US-China ties, he said he was encouraged that the new Obama administration had recognised China as an important partner, and had not started off with an 'antagonistic stance'.
US Secretary of State Hillary Clinton clearly showed during her recent visit to China that Washington wanted Beijing to 'be part of the solution to this global crisis'.
'They want China to continue to invest in US Treasury Bonds, for example. That's a very significant statement,' he said. 'And while the US continues to maintain its position on human rights and other religious freedoms, they will not let this overshadow the entire US-China relationship. So I think that's a very good sign.'
PM Lee also dismissed the suggestion that Asian countries were more comfortable with a Republican rather than a Democrat in office. Current US President Barack Obama is a Democrat.
'Whoever is the administration in America, we do business with them,' he said.
jeremyau@sph.com.sg
PUSHING AHEAD WITH COOPERATION
'Several of the countries are pre-occupied also with political issues, consuming domestic political issues, political succession in some cases.
And then against this background, to pay attention to Asean cooperation and to push it forward - that's tough.
But it's important for Asean to do that because in this global environment, if we give the impression that Asean is not fully open for business, I think we will be the losers when the new landscape emerges.'
Mr Lee, when asked whether the current crisis will derail efforts to create an Asean economic bloc.
JUGGLING THEM ALL
'Obama has taken over at a time when there are many balls in the air and he has to deal with all of them. The economy in America certainly, the global economy, but also international issues for them - Iraq, Afghanistan, the Middle East and their relations in Asia too. So I think they have to be able to juggle many balls at once.'
Mr Lee, on the challenges facing the new Obama administration.
