That is because the country is certain it will be lacking in skilled people once the recession is over.

'You don't educate them now, we have no time later. You would have lost a few years,' he said during a meeting with Shanghai Mayor Han Zheng.

'In Singapore, we have decided that although unemployment is rising, we are training more people, more graduates, more technicians at every level, because we are quite certain that once the economy recovers, we will be quite short of these people.'

In Singapore, unemployment among residents hit a five-year high of 4.8 per cent for the first quarter this year, up from the previous quarter's 2.5 per cent.

Mr Lee believes that the outsourcing trend which was popular before the crisis will return, bringing jobs back to Asia.

'There's a lot of union pressure now in America and Europe to keep the work in their own countries first because of rising unemployment,' he said on the last day of his four-day visit to China.

'But this cannot last because some countries that recover faster, like Germany, they will begin to outsource. And once they start and the prices of their goods will go down, become more competitive, the others will have to follow.'

He urged Mr Han to use this 'vacant period' to beef up the city's specialist skills because the quality of a workforce takes the longest to improve.

Mr Lee advised the mayor against taking the foot off the pedal when it comes to education and to continue beefing up its university graduate population.

'I read that there are six million graduates worried that they could not get jobs and are going to the countryside. The government should not discourage them. Take in more students, go through this hardship and prepare for manpower needed in the next phase,' he said.

He added: 'Get more students, get more graduates, it does not matter if for the time being, they get poor jobs. Tell them that better jobs will come, bound to come.

'Maybe if you are interested, sometimes you can send people to Singapore and see how we are making use of this time to prepare people for the new economy, because the new economy that will emerge out of this crisis will be different. It will not be the same old economy.'

He told Mr Han that he believes Shanghai has the resources to ride through the crisis even if it lasts up to five years, although he is looking to small positive growth in the American economy at the end of this year or middle of next. 'But however long and however fast the recovery will be, this is a chance for countries like China and Singapore to prepare for the next stage and improve on your capacity to absorb the kind of technology that the new economy will produce,' he said.

During the meeting, Mr Lee accepted Mr Han's invitation to visit the World Expo to be held here next year: 'I will make a point to come to see the Expo because I'm sure it will be a success. And we will also participate in it.'

Asked later by the home media whether he is confident Singapore could maintain a strong talent pool, Mr Lee referred to the immigrant talent from Malaysia, the region, and even as far as India and Hong Kong, saying 'the country would not be able to do what it has been doing' without them.

'If we keep on getting the flow that we have had, provided they stay, then we'll have enough talent to match what we have been doing.'

Mr Lee visited the Chinese Communist Party's school at Pudong district after his call on Mr Han, before leaving for home yesterday evening. He wrapped up a nine-day trip which took him to Japan and then China for the 15th anniversary celebrations of the Suzhou Industrial Park.

-end of ST article