Deglobalization is not an option for any of us, says German Chancellor Olaf Scholz

Chancellor Scholz with Singaporean ministers ahead of his speech on Monday.

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German Chancellor Olaf Scholz and Singapore’s Deputy Prime Minister Lawrence Wong have taken a united position on continuing cooperation with China, but also remain committed to diversification.

Scholz, who attended the Asia-Pacific Conference of German Business in person for the first time, told a packed room in Singapore on Monday that economies should deepen free trade in the face of geopolitical tensions, not resort to protectionism.

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

Scholz said Germany is keen to deepen economic ties with Asia-Pacific, not just China, in line with its commitment to trade diversification.

But diversification, Scholz said, is not decoupling, and it’s crucial to understand this at a time when concepts like “nearshoring,” deglobalization, and self-sufficiency are gaining momentum.

Deglobalization is not an option for any of us.

Olaf Scholtz

German chancellor

“Often these are nothing but protectionism in disguise,” Scholz said.

“Deglobalization is not an option for any of us.”

New research by the Hinrich Foundation said that while terms like “friend-shoring” have been added to the lexicon of US trade policy and that of other countries such as Japan, little has been revealed about what they mean.

“If governments try to intervene in a supply chain, they need to make sure they observe risk more closely than companies. But it is unclear what market failures that friend-supporting policies will remedy without further fragmenting the global trading system,” Halit writes. Harput said.

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

Nearly 600 key German and regional Asia-Pacific leaders attended Scholz’s keynote speech at the most important business event for German companies in the region. It was one of only two stops between the chancellor’s trip to Beijing last week and this week’s meeting of G-20 leaders in Bali, Indonesia.

Scholz also visited Vietnam.

When asked how German companies should handle both competition and cooperation with China, Scholz said Germany can deal with China if it can diversify its economy and supply chains.

Scholz used the examples of Germany strengthening its semiconductor, artificial intelligence and battery industries. China is both a competitor and a supplier in these areas.

Germany’s dependence on China for goods, especially key materials, has come under scrutiny.

Olaf Scholz in Singapore on Monday.

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Singapore’s Wong said the US and China both have broad interests in Asia and need to find a way to coexist, compete and work together peacefully.

“So from a Singapore point of view, we are encouraging better diversification. We are all in favor of more resilience, but we want to warn against regulations that would lead us to a more fragmented world, because then we will all be worse off,” Wong said. after Scholz’s speech on Monday.

But even if the US and China are the “most influential,” Wong said many economies, including Singapore, have the power to shape development in their own regions — and most will lean toward more globalization, not less.

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

“Germany does not want to separate from China, which remains an important business and trading partner for Germany and Europe. And that is also the view of Singapore and the view of many countries in ASEAN.”

Robert Habeck, Vice Chancellor and Federal Minister of Economic Affairs and Climate Protection, Lawrence Wong, Deputy Prime Minister of Singapore, German Chancellor Olaf Scholz and Roland Busch, Chairman of the Board of Directors of Siemens AG, meet at the 17th Asia- Pacific Conference of German Business (APK).

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“And within ASEAN, no country wants to be able to have the two sides between China or the US. There can be no good outcome for us if our countries are forced into two camps, a hard line or worse even a wall between them. “

And to remain 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 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 the Blavatnik School of Government at the University of Oxford, Ngaire Woods, said the G-20 meeting in Bali this week would be critical.

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

German Chancellor Olaf Scholz: We are Europe's biggest supporters

“In doing so, they must counterbalance domestic strength in both China and the United States, which is pushing them toward an increasingly nationalistic ‘America First’ or, in China, a ‘self-reliant’ approach to global cooperation.”

“We don’t need them to bring a new agreement to the World Trade Organization, but to keep it working, to apply the rules.”

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