US recovery must come first, Singapore envoy says

July 1, 2009
Singapore Democrats

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Singapore envoy tells Arkansas audience: East Asia will recover from meltdown only after US

Tom Parsons
Associated Press Writer

A recovery from the worldwide economic slump will occur in east Asia only after it has begun in the United States, the Singapore ambassador to the U.S. said Tuesday.

Protectionist measures won’t help recovery in either the U.S. or east Asia, Chan Heng Chee told an audience at the Clinton School for Public Service. She said free trade “is a win-win situation that benefits both countries.”

Chan said her country has been hard hit by the downturn. Before last fall, Singapore’s economy had been growing at an annual rate of 8 to 9 percent, she said, citing figures from the International Monetary Fund. The IMF estimates the nation’s economy will contract as much as 10 percent this year, she said.

“We are the most global economy in the world,” Chan said, with a gross domestic product that’s only a fraction of its exports.

Her nation is not alone in that respect, she said.

“East Asia’s growth was built on globalization,” she said. As a result, the major trading nations in the region — China, South Korea, Taiwan, Japan, India and Singapore — have seen their exports plunge 25 to 30 percent since the downturn, she said.

The U.S., which buys so many Asian goods, will be the engine for recovery in the region, Chan said.

“Unless the U.S. economy recovers, there will be no recovery in east Asia,” she said.

It won’t be the first time the U.S. has played such a role. She recalled that the strong U.S. economy, along with that of Europe, helped east Asia recover from a financial crisis that hit the region in 1997.

Reform that followed that crisis eventually led to stronger economies in the region, she said.

“Those who reformed furthest in the 1997 financial crisis came out best,” Chan said.

She predicted a “global rebalancing of power” with a “new world order” will result from this crisis but said the U.S. will still be a major force. The U.S. remains the world’s most powerful nation, both militarily and economically, Chan said.

But the distance between the U.S. and other nations is closing, she said, as has already become apparent. The number of U.S. banks in the world’s top 50 has dropped from 24 in 1999 to 11 now, she said, citing a story in the Financial Times. In 1999, the top two banks were in the U.S. Now, the top three are Chinese.

Chan said China, with its huge population, will become a bigger global power as its economy develops.

“There is no doubt China will be a winner,” Chan said. “And a China (in which most people) are living at the level of South Korea will be tremendous.”

China’s development will have other effects, too, she said: The U.S. now attracts students from other countries who want to get an advanced education, but in the future, more will go to China. Chan was herself a Fulbright scholar who attended college in the U.S.

Human rights will benefit from the emergence of larger and healthier economies in Asia, with better-educated populations, she said.

“Economic development is liberalizing,” Chan said. “You cannot keep people down once they are educated.”

http://finance.yahoo.com/news/US-recovery-must-come-first-apf-2433489830.html?x=0&.v=1