US-China dialogue and Singapore’s balancing act

[WORLD] Singapore’s Defence Minister Chan Chun Sing emphasized the city-state’s commitment to principles over power alliances during the 2025 Shangri-La Dialogue, asserting that Singapore would prioritize a rules-based global order to ensure fairness for all nations, regardless of size. His remarks underscored Southeast Asia’s “geostrategic necessity” to engage both the U.S. and China, while warning that reflexive alignment risks irrelevance. Chan also urged sustained U.S.-China dialogue, noting that while tensions persist, both sides expressed a desire to avoid conflict and deepen mutual understanding.

U.S. Defense Secretary Pete Hegseth framed China as a “threat” in his keynote speech but explicitly rejected intentions to dominate or provoke Beijing. Chan highlighted this nuanced messaging, urging observers to weigh the Pentagon’s security concerns against its stated openness to cooperation11. Meanwhile, China’s absence of high-level representation at the summit—a first since 2019—drew attention, though Chan downplayed its significance, stressing that substantive dialogue matters more than symbolic attendance.

The forum reinforced Singapore’s role as a neutral convenor for frank discussions on Indo-Pacific security. Chan emphasized military and economic security as intertwined, advocating for “a web of bilateral, plurilateral, and multilateral networks” to stabilize the region. His call for “coffee table diplomacy” over social media posturing reflected Singapore’s preference for discreet, relationship-driven problem-solving.

Implications

For businesses: Chan’s principles-first approach signals Singapore’s intent to resist forced decoupling, offering multinational firms a stable hub amid U.S.-China rivalry. However, businesses must still navigate residual tariffs and export controls, as the recent U.S.-China tariff rollback remains fragile. Sectors like semiconductors and green tech face heightened scrutiny under both nations’ industrial policies.

For consumers: Prolonged U.S.-China tensions risk inflationary pressures, as seen during the 2018–2024 trade war when U.S. tariffs raised prices for imported goods by up to 4.5%. While current tariff reductions may temporarily ease costs, consumers remain vulnerable to political shifts, particularly with U.S. elections looming.

For policymakers: Chan’s warning against “the law of the jungle” underscores the urgency of revitalizing multilateral frameworks. ASEAN’s push to shield trade from “arbitrary restrictions” (echoed by Malaysia’s Anwar Ibrahim) may pressure the U.S. and China to align competitive strategies with WTO norms. However, diverging views on Taiwan and the South China Sea complicate consensus-building.

What We Think

Singapore’s principled neutrality—straddling great-power rivalries while advocating institutional guardrails—remains viable but increasingly precarious. Three observations stand out:

The “Switzerland of Asia” model faces stress tests. Chan’s insistence on issue-based partnerships works only if major powers tolerate middle states’ agency. As U.S.-China tech and defense decoupling accelerates, Singapore may struggle to maintain equidistance.

Trade-security linkages are irreversible. Chan’s assertion that “military and economic security must reinforce each other” reflects a global trend. Nations will increasingly weaponize supply chains, as seen in U.S. semiconductor curbs and China’s rare earth controls.

Dialogue forums need tangible outcomes. While the Shangri-La Dialogue provides aircover for backchannel talks, its utility diminishes if key players like China send lower-tier delegations. Track 1.5 diplomacy must evolve beyond “exchanging notes” to actionable crisis protocols.

Ultimately, Chan’s debut as defense minister reaffirmed Singapore’s niche as a trusted interlocutor. Yet his warning that “freedom is not free” serves as a reminder: Small states’ influence depends on relentless diplomacy—and readiness to back principles with credible deterrence.