The Monetary Authority of Singapore (MAS) is worried about rising trade and technology tensions between the major powers.
It believes that everyone will lose if the conflict leads to a bifurcation of technology.
“The short answer is that it is worrisome. I think the last thing we can afford is a bifurcation in technology across the world, because technology thrives on connectedness, on interoperability,” MAS managing director Ravi Menon said at a webinar yesterday.
US-China relations have deteriorated rapidly across a broad range of issues, with both sides shutting down consulates, engaging in diplomatic tussles over Hong Kong and Taiwan and the US pushing for a ban on Chinese tech firms including ByteDance, owner of TikTok. That has kindled global fears of a new Cold War that might drag trade and the global economy deeper into recession.
Mr Menon said that while the trade conflict is also worrying, it is in some ways easier to handle.
“You have seen in the last few years how agile many of the businesses have been in reconfiguring the supply chains, making adjustments to overcome the barriers.
“This is the great ingenuity in the private sector that allows them to live with, not with a full-blown trade war, but with the kind of trade conflicts we have seen.”
The central bank chief said he was more worried about the conflicts over technology. “Unlike trade, trading goods especially, when it comes to technology, a lot of it is so deeply embedded in the products and services… The chips come from somewhere and software from elsewhere. How do you disentangle what comes from where?
“So unlike trade where you can draw sharp lines, technology is embedded and intertwined in much of what we do. If there is going to be a bifurcation, or prohibitions on using some technologies or employing certain technologies, that’s going to be hugely difficult to handle,” he said.
Mr Menon believes that if tech prohibitions were to be imposed, some innovators might take them as a challenge. “If you are going to have this bifurcation, how do you get around it? How do you create systems and architecture that are open and interoperable (and) still not break any rules or laws? I don’t know, but maybe that’s another thing we’ll have to think very hard about.”
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