SINGAPORE (Jan 24): Both the U.S. and China must make adjustments if they are going to reach a lasting phase-two trade deal that benefits the rest of the world, Singapore Prime Minister Lee Hsien Loong said.

Speaking in an interview with Bloomberg’s Editor-in-Chief John Micklethwait, Lee said “both sides have to make quite basic adjustments.” The U.S., he said, must decide whether to create rules that allow “the best man” to win or only let America come out on top.

“America First means you do the best for the United States,” Lee said in Davos, Switzerland, while attending the World Economic Forum. “So do you do the best by prospering in the world and there are other countries who are doing well, or do your best by being a big country in a troubled world? And I’m not sure that the second is a very good answer.”

China, on the other hand, must decide whether they are going to be “constructive players” in world affairs and accept that “rules which were acceptable to other countries when they were smaller and less dominant now have to be revised and renegotiated,” Lee said.

“It’s not so easy for them to concede and voluntarily step back from what they feel they can hold on to for a while longer,” he said. But if they make that adjustment, “there’s some possibility of working out a modus vivendi which will be stable and constructive for the world,” he said.

Huawei Concerns

Singapore, a city-state heavily dependent on trade, had been one of the most outspoken countries in Asia calling for the U.S. and China to reach a trade deal. Lee has warned that Southeast Asian nations might one day be forced to choose if the world economy gets pulled apart into different blocs.

The Trump administration has sought to convince countries around the world to avoid using equipment from Huawei Technologies Co., China’s biggest tech firm, for 5G networks, arguing it poses a national security threat. Singapore’s government so far has left the decision up to its telecommunications operators.

Lee reiterated that Singapore hasn’t “banned Huawei” but will evaluate it based on operational requirements. Any system will have weaknesses, he said, and governments must try to keep them secure.

“We have to make our own assessments, and the assessments have to be based on facts and risks,” Lee said. “And having made those assessments, well we may come to a conclusion which is different from what the Americans have come to, but it doesn’t mean that we’re not concerned about similar issues.”

Lee added that differences of opinion on Huawei don’t necessarily signal a loss of U.S. influence. “If you ask us on security cooperations, certainly we are closer to the U.S. than to China,” Lee said. “But in terms of our trade, the Chinese are our biggest trading partner. In terms of our overall relationship, we have deep relationships with both.”

March Summit

President Donald Trump last November invited countries in the 10-member Association of Southeast Asian Nations, or Asean, to a special summit in the U.S. after he skipped the bloc’s meeting in Bangkok. At the time, most leaders in the region snubbed the group’s meeting with Trump’s representative, National Security Adviser Robert O’Brien.

Lee said he would join other Asean leaders for a meeting with Trump in Las Vegas on March 14.

“I’m sure we’ll be discussing areas where we can cooperate and do more together,” Lee said. “I hope that Mr. Trump, amidst his many domestic preoccupations, will send a message that Asia is important to him and Southeast Asia has its part in the Americanscheme of things.”

China has recently stepped up efforts to assert its territorial claims in the South China Sea, prompting fellow claimants like Vietnam, Malaysia and Indonesia to resist those advances in the energy-rich waters. The Asean bloc has been negotiating a legally binding code of conduct in the waters for more than two decades, and aim to complete it in the next few years.

“It’s not an easy thing to do,” Lee said of the code of conduct. “We’re working at it and we’ve made some progress in the negotiating process, but I think it’s better to be talking and working toward this rather than abandoning this and actually coming to blows on the ground.”