PM Lee Hsien Loong held a dialogue with attendees of the DBS Asian Insights Conference in Shanghai, China, on 12 April 2018. The dialogue panel comprised PM and moderator Mr Robin Hu, Senior Managing Director, Head (Sustainability and Stewardship), Temasek International.
Mr Robin Hu: Sir, you met President Xi Jinping, Premier Li Keqiang, and you also met Vice President Wang Qishan. Is there anything that you can tell us what messages those leaders may have had for you and Singapore, and vice versa?
PM Lee Hsien Loong: We had very good meetings with all three of them. Our relations are good; we would like to do more together. I think the leaders said quite clearly how they saw things bilaterally, as well as more broadly in the region. They would like to have a forward looking relationship and Chinese would say 与时俱进. They would like to do more together in many new areas. We are cooperating with them bilaterally, I listed out some of the areas just now in my remarks. We are working together and Singapore is the ASEAN Chairman for this year. For the first half of this year, we are the ASEAN co-ordinator for relations with China and there is work on the ASEAN account too. More broadly than that, we share a concern on what is happening in the world and we compare notes on what is happening in the world. I talked about it in Bo’ao, in my speech, expressing my worries about trade tensions, where they may develop, what implications it will have for the rest of the relations between China and America, and in fact, for all the other countries in the world. Because it is so crucial to everybody that China and America maintain a good bilateral relationship. These were all areas which we discussed with the leaders. We had a warm and candid exchange of views. I think it has helped us to understand one another’s positions and concerns. I believe that it will bring our two countries closer together.
Mr Hu: If I can just pick up on the US-China relations, which is probably the most pivotal relations of all geopolitics today. Since the second World War, I think we know that the US-engineered world order has done plenty of good but China has emerged a very strong competitor to the US. Now, with more unicorns on the Chinese side than on the American side, the race for technological superiority and dominance over the Internet economy has raised some security concerns. We see Committee on Foreign Investment in the United States (CIFIUS), the Foreign Investment Review Board (FIRB) of Australia, other pending legislations, all designed to keep Chinese investment into high technologies away. Even Europeans are looking at it. Are we now entering in a world of some turbulence?
PM Lee: We watch this carefully, we are trying to understand how it will develop and what it means. I think for the global trading system to work optimally, there has to be confidence and trust between countries. It is not just individual transactional trade. If I invest in your country, or if you invest in my country, you are a long term presence. I have to have confidence that you mean me well, that you operate according to the rules, that this will be part of the way the market operates and not be part of the way in which governments may influence events in other countries to their advantage. There has to be confidence in order to have a free flow of trade and investments. If relations are bad, people will cut off trade even though it hurts themselves. If trust is not there, people will restrict investments even though it may hurt the value of the companies. There has to be confidence for this flow to happen, and if the confidence is impaired and investments are restricted, that in itself can become a reason for further dispute and you end up with rivalries and tensions and I think the world is going into a much less safe place, and we worry about that.
Mr Hu: You mentioned confidence, you mentioned trust – which is important between person to person, family to family, company to company, and certainly very important, between state and state. That brings me to think about the 19th Party Congress and the Two Sessions which has been concluded. Many momentous decisions were made as a result of the 19th Party Congress and Two Sessions. Some constitutional changes took place as well, which understandably the western world is very concerned with. How does the world see China in the context of the new era – the 新时代, the 新名词. Conversely, how does China see itself? How large is the gap? How can they bridge the gap?
PM Lee: Well, I think it is always difficult to see how others see us. We have a view of the world, we have a view of ourselves, but it is difficult for us to appreciate how others may perceive us and may read our moves and our intentions. China has become stronger; China’s ambitions have grown; China’s aspirations to become a modern, developed, forward looking socialist power – 新时代中国特色社会主义强国 – by 2050. I think that is something which everybody has noticed, and everybody is trying to understand exactly what it means. 强国 can mean great power, but I think the English translation is officially great country, which is a gentler interpretation. I think people will want to know how gentle a great power China will be. It will defend its interests, it will want to advance its interests, but at the same time, to what extent will it accommodate the interests of others and be a constructive player in the global economy. It has said so, it has signalled clearly, but these are things which can only be fully resolved in the fullness of time, through the unfolding of events and the way China reacts and deals with crises, opportunities, cooperation and conflicts with other countries. Then, you will know what sort of China will it be, and how it will work out in the 21st century.
Mr Hu: I think if there is any journalist in the audience here, please take note of the new expression – “the gentle great power”. Prime Minister, do you think China has sufficient awareness of the importance that in order for China to succeed, they need to also know and realise and appreciate how others think of them.
PM Lee: I think they understand the importance. China has one of the largest and most effective Foreign Ministries in the world so they put a lot of effort into this. But to appreciate the mindset of other countries, which is very different among countries, other cultures which may not see China as completely familiar and see this as different. How will they react? That is very difficult to put yourself in somebody else’s shoes. The Americans look at China growing. They say, “Why is it not becoming more like America?” Why should China become more like America? But the Americans had hoped so, they find that it is not so, they worry that if it is different, it will become non-cooperative and perhaps unfriendly, and they worry about it. But the Chinese do not expect America to become more like China, so there is not a symmetry in this expectation. That is just the way the world is. We hope that with more Chinese studying abroad, travelling abroad, more exchanges between the leaders, between the academics, and also the Chinese media present abroad and hopefully explaining how things are elsewhere to China, some of this gap can be bridged.
Mr Hu: Prime Minister, you would agree that there is no universal standard or path towards human advancement or political system.
PM Lee: I think none of us want to be poor, miserable or ill. We want good health, stability in our lives, peace, prosperity, to live in a world where we can bring up children and grandchildren, to have a better hope than we do. That is universal. If you are talking about financial services and banking, there is no Asian banking as opposed to European or American banking – banking is banking. If a bank is sound, it is sound. If it is unsound, whether you are in Asia, Europe or America, if the numbers do not add up, you are unsound. Some of these things are universal, the laws of science are universal but when it comes to human affairs, how do people see themselves as members of a community, of a society? How does a nation define itself? How do you want to organise your affairs? How do you want to govern yourself? I do not think there is any one solution. In fact, it is not so clear that anywhere in the world, there is a solution which is working very well for any of the countries. Each of the countries has its own difficulties. The Americans consider their political system to be facing a very grave test now because of the deep division between the Democrats and the Republicans, and the strong populist reaction towards the intellectual and the policy intelligentsia, and those who are affluent and privileged. The Europeans also have a similar reaction towards immigration, towards openness, reaction even towards greater integration into the European community to become a European identity rather than a national identity. Their elections are showing all sorts of quite surprising outcomes – the Italian one being the most recent. And you are unable to form governments for months after the elections because it is not that the politicians cannot agree but the voters have not been able to form a consensus on which direction the country wants to go. China has a different model; Singapore has our own model. We are different from the West; we are different from China. China has its own formula, its own circumstances, and you have to feel your way forward because there is no precedent in the world for 1,400 million (1.4 billion) people to live stably and peacefully, in a way which can be sustained from one generation of leaders and population to the next generation. How do you do that? In the old days, you have a 皇帝, and then it lasts for a few hundred years and then somebody will come along and system breaks down and you start a new dynasty. But that does not work anymore so you have to find your own way forward and I think that is what they are trying to do. I do not underestimate the difficulty of the challenge.
Mr Hu: You mentioned USA. One of the most difficult things to do today is probably to make Washington make sense. President Trump’s, of course, America First policy has captured him the White House. Less than 20 years since China entered into the WTO, China and US are now engaged in an escalating trade war right in front of our eyes. You said, only a few days ago, in an interview with People’s Daily, that there can be no winner in any trade wars. As an open economy, Singapore can get hurt in the crossfire. China is becoming an expensive for manufacturing as well. ASEAN could potentially benefit from any displacement of investment and jobs as a result of that. What is your assessment of the trade war that is going on? What implications do that have for ASEAN, and the world as a whole?
PM Lee: I do not know that a trade war is going on. I think that a serious dispute has been joined. The Americans have taken certain unilateral moves, and the Chinese have responded as they have to do but they have responded in a cautious and carefully considered way. They do not want to escalate. They do have to protect their position. They hope that some way can be found out of this. I do not know what is happening behind the scenes. I hope that there will be contacts and engagements and a way in which some accommodation can be worked out. Some of the factors are the unilateral moves which countries have to take for their own overriding policy and strategic reasons. For example, the statement which President Xi Jinping made in Bo’ao, in his speech, enunciating the direction of China’s strategy – the irreversible commitment to further opening up and liberalisation – and also specific liberalisation moves in automobiles, intellectual property, imports, treatment of investments. These are, at the same time, things done for China’s own reasons. At the same time, they are signals to the world that this is what I am trying to do. I think that these are helpful. I hope that it would be possible even at this late stage to head off a full-blown trade war. The consequence is not so much the amount of tariffs which are imposed, which in the scheme of things, are not huge. But the damage to the multilateral trading system, to confidence in their multilateral trading system, which all countries depend on, and also the damage to the non-economic parts of the relationship between America and China. The trust, the mutual willingness to cooperate, which you must have if you are dealing with North Korea, you must be able to talk to one another, and not have this quarrel somewhere not very far from the front of your minds. If you are dealing with climate change, you have to be able to talk to one another. If you are dealing with extremist terrorism, and intelligence agencies want to share information or have to deal with a live situation because an attack is being planned and you need to respond in real-time, you must have that confidence, and that political level working in good order. These are all very big potential negatives from a trade war. Your second half of your question, about whether some of China’s manufacturing will go to South-east Asia, I think it will go to Southeast Asia anyway because China is upgrading, transforming the economy, and wages are rising. What you used to do before, may not make sense for you to do anymore. For example, countries like Bangladesh are doing textiles which China, I think, is no longer competitive or interested in doing. Countries like Vietnam are doing electronics, some components, which in China, it may not be worth doing anymore. That will happen, and that is to be encouraged. But I think if there is a big trade dispute between China and America, all that will be are a few consolation crumbs, it will not make good the loss to all of us.
Mr Hu: We all know that in any trade war, the economic impact is little compared to emotional and psychological impact. You mentioned in your response earlier on two areas – the impact on security and multilateral trading organisations. First, we all know that you are a passionate supporter of the Trans-Pacific Partnership (TPP). We also know that the free trading nations breathed a sigh of relief when 11 of the original 12 TPP members agreed to form a revised version of the partnership agreement last month. Where does this Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) fit into the world caught in the current protectionism wave?
PM Lee: The TPP was meant to bring economies on both sides of the pacific, both rich and poor together in an agreement which was a high quality free trade agreement. There were 12 members, including South American countries like Peru and Chile, America, Canada, Mexico, Singapore, Vietnam, Brunei, Australia, New Zealand, Malaysia, and Japan – a range of economies and it was a nucleus around which we hope in the long term to have free trade in the Asia-Pacific. The Koreans have expressed interest, the Indonesians said they were in-principle interested. The Chinese are not ready but they did not rule out participating in the long term. It was an important initiative – the countries worked very hard for six or seven years on it. They came to an agreement. Unfortunately, the new American administration under President Trump decided that they would opt out from this and they did not like it. They said “No, we are not participating.” The remaining 11 got together and preserved almost all of the original TPP agreement, and formed a group which is now eleven strong, where the door is open for others to join. America, one day, if it wishes, or other economies including China, one day, when they are ready. I think that is how it fits in. It does not make good for any other trade turbulence. It has not altered their mood in America in the short term, but we hope we are doing positive work and preserving options for the long term.
Mr Hu: The high quality multilateral trade agreement allowing countries from all of Asia-Pacific, at different stages of economic development. We all know that the 11 countries, not all of them have ratified the agreement. I think six of them are still going through the process. I think Prime Minister Najib, who is caught in the middle of a General Election, has said that he did not think it was going to be ratified even by the end of the next year. Realistically, when do you think an agreement can be agreed to by all 11 parties and we can really begin the high-quality multilateral agreement across Asia-Pacific?
PM Lee: I do not think anybody has ratified yet. It has just been signed. I do not know the fine print but the ratification requires at least six of the economies to ratify and then the agreement will come into effect for those economies. I do not think it will be hard to find six economies because certainly Singapore will certainly be keen to participate, so will Australia, Japan, so I expect will Mexico. I am sure there will be a few others as well. I expect it will come into effect within a couple of years – I hope so.
Mr Hu: That is very heartening to know. What about RCEP? If I am not wrong, 45 per cent of the world’s population, 40 per cent of world trade, and that has China and India in it. When do you think we can expect an agreement to be sorted out?
PM Lee: We are hoping to complete it this year, there is work to be done and the countries positions are not completely converged yet. I hope we will be able to make good progress and have a good quality agreement by this year.
Mr Hu: That is very good to know. There was also an earlier reference to a security concern in North Korea. We have seen some seeming breakthroughs on that front. Are you optimistic on a resolution of North Korea?
PM Lee: I think this is a very complicated problem. I cannot imagine it being solved very simply just by leaders meeting one another. It is a good sign that the leaders are prepared to meet but it is really the beginning of the process. It is a very difficult problem because the hurdle for the North Koreans to agree to give up their nuclear weapons and capability will be very high. At the same time, the concern of the neighbouring countries that North Korea not be recognised as a legitimate country which is entitled to own nuclear weapons, is a very real and valid concern. It is shared by the Chinese, Japanese, South Koreans and Americans, at the very least. I think the Russians too. To get these two positions together, it will take very skilled diplomacy and a lot of hard work.
Mr Hu: Prime Minister, Singapore is chairing ASEAN this year. ASEAN has ten members, so it goes by rotation – once every ten years that we get Singapore to chair. What outcomes can we expect from ASEAN this year, under the chairmanship of Singapore?
PM Lee: Our theme is ‘Resilience and Innovation’ – it is twinned. Resilience to strengthen our ability to cope with challenges, threats, emergencies. Innovation to help us break new ground and to grow and prosper together. We have an agenda under both of the items but both of the themes, resilience, for example, we are talking about the model mutual legal assistance treaty between the ASEAN countries so that we can render help to one another more readily and effectively. Innovation, we are talking about IT, amongst other things, Smart Nation, Smart Cities, and the idea of having an ASEAN Smart Cities Network, which can share ideas, who can link up their systems, who can work together in order to use IT. In fact, this is something that we would like to work with China because China is very advanced on IT and many of their cities are using IT to a very considerable extent. You have a Smart Cities Network in China, so we hope we will be able to work with China and link it up. We hope that at the end of our term as ASEAN Chairman, we would have left something valuable. It is a rotating chairmanship; in Chinese they say 轮值主席国. We are only taking our turn, it is like being class monitor for this term, but we hope that during this one year, we will do something useful.
Mr Hu: For our two hundred growing unicorns in China, I think we not going to just see a Smart Cities. I think the emergence of a Smart Nation is indeed the beginning of reality.
PM Lee: 我看今天的情况和前一代的情况已经很不相同了。前一代，中国还没有这么开放，中国还没有跟世界所有的国家接轨。所以新加坡可能比中国先走了几步，所以是比较熟悉国际情况，有机会帮助两边了解对方。现在我看中国已经非常开放了。中国和所有的国家都保持很密切的交往，并且很了解各国的情况。所以新加坡是一个小国，我们有我们的立场，有我们的利益，有我们的看法。我们能够坦诚地表达我们的立场，很直接的分析我们看到的国际情况，那利益所在，那解决的可能的方案，可是我们并不能主导实事，并不能解决这些国际问题。我不相信我们现在已经是贸易战了。现在是贸易摩擦，双方都已经摆了阵势，可是还没有一来一往的打过去，希望不会达到那个地步。
Q: The latest UN report showed that the merger and acquisition deals valued by Chinese companies in ASEAN countries reached a new high last year. My question is, what trends are you seeing in Chinese outbound direct investment in ASEAN countries, and to avoid investment pitfalls in these countries, how should Chinese companies better protect themselves against risks?
PM Lee: I think the outbound investments are growing. In Singapore, we have 7,500 Chinese companies, big and small. They are operating in Singapore. We are happy with them; they are doing generally well. I see more Chinese investments going to other ASEAN countries too. Many of them are major infrastructure investment projects, billions of dollars. These are major initiatives and at one level, they are commercial initiatives but at another level, they also shape the overall relationship between the ASEAN country and China. And I think for them to be successful and for the relationship to be successful in the long-term, it is important that we build on sound commercial grounds, that there will be win-win projects and also that there will be political acceptance in the countries where they go to, because when you have a very big investment from a different country coming in, particularly if it is a state-owned enterprise, there is always a perception that is this a commercial project or is this more than a commercial project, and is it benefitting the investor only or is it also benefitting the local people – the individuals, the workers, the local companies. So the more it can be seen that it can be a commercial project, the more it can be seen as benefitting broadly the people in the countries where the projects are taking place, I think the more sustainable it will be.
PM Lee: 我们政府之间的合作项目是与时俱进的，是配合中国那一个时代的发展需求和政府政策的关注点。所以在苏州工业园创始的时候，就是90年代，中国当时是注重招商引资，并且注重要开发一个说是工业区，其实是一个整个城市规划的模式。那苏州工业园的重点就是开发这个新的市镇，同时招引跨国投资进来，组成一个蓬勃的经济体，我看可以说是及格了。那中新天津生态城呢，那个时代是中国注重环保，要发展环保城市，所以中新天津生态城是一个环保城市的模范典例。现在，重庆互联互通项目，它的重点不相同，不是物质的投资，而是互联互通，就是说物流、金融方面的互联互通、资讯方面的互联互通。所以重点是软件，重点是连接中国不同地方的发展潜能，使它们能够互动起来，能够发挥更大的效用，所以这是我们的期望。它的中心是重庆，不过其实重庆是在西部大开发的中心。同时，我们希望把一带和一路连接起来，一带是往中亚走的，一路是海上丝绸之路。所以南向通道呢，从甘肃到重庆到贵州到广西，那直接下来乘火车就可以上船了，比沿长江下游一直走到上海才上船，上海是好地方，不过重庆到上海比重庆到钦州港来得远得多。所以我们希望通过这个项目，我们会对中国西部开发有贡献，对中国“一带一路”的计划也有贡献，同时对中国要发展物流业，减低物流成本，加强我们的互联密度，我看应该是有帮助的。
PM Lee: 谢谢。
Q: We have made quite a good progress in supporting the Belt and Road Initiative (BRI) in China and also overseas. I would like to have your views on how we can do better to support the BRI in China and across Asia?
PM Lee: We in Singapore would like to play a role in the BRI, both in terms of projects in Singapore but also in terms of projects in third countries. Our financial services in Singapore, they are comprehensive. Singapore is a good financial centre and many of the projects in Southeast Asia at least, and even beyond Southeast Asia, can in fact benefit from financing which is organised and provided out of Singapore. So that is one aspect of it. Another aspect of it is third-country projects where Singapore and China could get together and do a project in another BRI country. I think there are opportunities; we are exploring them. There are also opportunities for us to have third-country trainings for other BRI countries to come to Singapore and training can take place in Singapore – exchange views, exchange experiences, to know what can work, how they can do development projects together and how we can connect up our economies closer together.
Q: Will the Guangdong-Hong Kong-Macau Greater Bay Area bring more cooperative opportunities for Singapore and China and do you have any expectations for this plan?
PM Lee: I read the reports. I think it makes sense. I hope it will bring the economies closer together and they will be able to prosper more. I think there are also political issues involved in this kind of link-up but I am sure it will be overcome in time.
PM Lee: 个别领域，我们当然希望能够更开放，可是最重要的是宏观的方向和意愿，和这个意愿如何能够落实，能够让个别公司具体收益，能够显示给世界看，同时能够让中国的商家、部门等知道这个大方向是不可扭转的。我看这个是最重要的因为中国是一个很大的国家，所以领导的方向很清楚但是要把这个信息传达到中国每一个角落，能够在每一个省，每一个市，每一个县，每一个部门，每一个官员，去落实它，去体现它，去贯彻它的精神，这个需要许多学习，并且需要一段时间。我看尽快，尽好，这个是习主席所说的，我完全同意。
Q: Over the past few days, Chinese leaders renewed their pledges to open up the Chinese economy, especially the financial sector, cutting the tariffs on cars and also eliminating the foreign ownership gap for foreign financial institutions. So what kind of opportunities is the financial market opening in this new round, going to get companies from Singapore and what do you like to see China to do in broadening market access?
PM Lee: I just answered that in Chinese but I think the more, the better – 多多益膳.
PM Lee: 我最近没有研究苏州工业园的近况，可是我知道苏州工业园逐年来每年都有进步，都已经跟我们当年创业的时候已经很不相同了，规模大了，并且公司的水平和技术含量都提高了。可是现在中国每个城市都有园区，并且大家都借鉴了苏州的经验，已经在各地落实了他们个别的计划。我们创苏州工业园本来这个就是目标，所以我们应该说是满足了，但是从工业园的角度来看，当然这是一个挑战。所以要怎么样做呢？我看我们要提升工业园的素质一方面是投资的内容，但是另一方面是能够创造一整个营业、工作、居住环境，吸引人才到苏州来，在苏州愿意创业，愿意研发，愿意去打破旧模式的新的产品或新的服务。拿深圳做一个例子，深圳本来是一个开发区，本来是一个制造业中心，可是现在深圳是一个研发中心，是一个有很多独角兽的城市了。苏州我不知道有几只独角兽在那里存在，不过我看苏州也有条件成为这样的一个地方因为苏州离上海不远，生活环境很好，并且已经有这个品牌，有口碑了。所以如果你可以用这口碑吸引人才到苏州来，他们在这里，惺惺惜惺惺，在吸引更多人进来，我看有时间能够再百尺竿头，再进一步。新加坡当然很乐意继续帮忙，因为我们还是股东，虽然是小股东。
PM Lee: 我看中国已经有许多直接的桥梁、隧道、航空、连线都有了。前天在博鳌，习近平先生就会见了萧万长先生，是台湾的一个人物。他不在政府可是他是台湾人。那我看中国和台湾有直接的联系，中国和东西方国家也有直接的联系。所以新加坡扮演的角色跟以前不相同。我们是小国，我们自量，我们不能够说我们能够扮演关键的角色，但是我们尽力贡献一份微薄的力量。
PM Lee: 我去广西没有那么多年吧。我去过两次，不过前一次是2014年，有机会去看了漓江，阳朔，很漂亮的地方，希望有机会有一天再来，肯定会有机会的。至于要怎么推进南向通道，我们已经尽全力了。我希望中国这方面也会尽全力。
PM Lee: 这个应该问星展银行最好。我相信他们也有计划，但是当然需要有关方面的配合和支持。
PM Lee: 这个要看中国对人民币国际化的看法。因为一方面中国的政策是鼓励人民币国际化，所以在许多金融中心都有银行可以收人民币的户口，都可以有清算银行，在新加坡也有清算中心。可是另一方面，中国有担心如果资本账户打开地太快的话，可能失去控制，影响中国的金融系统的稳定，影响中国汇率系统的稳定。所以，它两者之间有矛盾，怎么样要取得平衡，这个我看中国还在探索之中。所以一方面， 中国鼓励人家用人民币，但是另一方面又担心如果流动量太大了，那很难控制。所以如果中国这方面能够更清楚地发出讯号，那当大家投资或贸易，或者要签合同的时候，就比较清楚，要用人民币好或者用欧元，或者用美元，这个有选择。
PM Lee: 我看有不断地进步，但今天不是出炉的时候。
PM Lee: 我看要当领袖，条件很多。（如果）你读关于领导的书本都列出来了，没有人可以满足所有的条件的。所以我们重要的是团队里，这些团队的成员之间，能够满足足够的条件，使他们合作，能够一起带动新加坡，带领国家，这个是最关键的。如果我们只想找一个人，样样事都能够做，我看这个是很不实际，没有人能做得到。但是要找一个能干的团队，他们能够紧密合作，他们能够赢得人民的信心，能够带领人民创新，应战，解决问题，走出新的路来，并且使国人感到自豪，我是新加坡人，我对新加坡作了贡献。
PM Lee: 当然。
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