Decoupling is the last thing on business leaders’ minds

IF YOU WANT to understand how Asia’s view of the world order has changed, consider the remarks of Lee Hsien Loong, Singapore’s prime minister. Asked recently if China was rising and the United States was declining, he replied in a qualified way: “If you take a long view, you really have to bet on America recovering from whatever things it does to itself.” Across the region firms and politicians are adapting to a new geopolitical reality, as was evident at the Bloomberg New Economy Forum in Singapore last week.

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Designed to be more useful than Davos, less Utopian than COP26 and less wooden than China’s Boao forum, the summit convenes some of the figures who built Sino-American links over the past decades, and bosses and investors responsible for over $20trn of market value. Amid hygienically controlled flesh-pressing, and relentless nasal swabbing, you could get a sense of the tensions between the world’s two biggest economies. It was clear that calls to divide them into two camps are wildly unrealistic.

Asia matters because of its size, with 36% of the world’s GDP, 31% of its stockmarket capitalisation, and 11% of the sales of S&P 500 firms. The region is likely to grow faster than the rest of the world. It is also where the struggle between America and China is played out overtly, with the two systems competing side by side. China dominates trade. Of the 20 major Asian economies, 15 have China as their largest goods-trading partner. Yet most countries also rely on America. In many cases it is their defence partner and the dollar is the currency in which most Asian trade and capital flows take place (in contrast to Europe, which has the euro).

The region’s balancing act has got harder as America and China have turned inward, partly in response to the perceived shortcomings of freewheeling global capitalism. A widely held view is that America’s system of government has been permanently impaired by cronyism and populism. As a result its promises are taken less seriously. Gina Raimondo, the commerce secretary, said America would launch a new Asian economic “framework” in 2022 (it has not joined CPTPP, a regional free-trade deal). Her proposal was greeted only politely, given the Biden administration’s protectionism and the risk that Donald Trump wins the election in 2024.

China has also become unpredictable. Most executives and officials are sanguine about the crisis at Evergrande, a property firm. They believe that China’s technocrats are in control and can avoid a systemic financial crisis. Many sympathise with China’s antitrust crackdown on big tech. But there is deep unease at Xi Jinping’s totalitarian impulses and his broader assault on business. Whereas before, well-connected foreigners would have been given reassurances by China’s economic reformers in private meetings, now they have to make do with stilted video calls monitored by the Communist Party. Ties are fraying even within companies. One founder of an Asian firm with a Chinese parent company has not met the owners for two years….

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