PM Lee Hsien Loong at the Dialogue at the Council on Foreign Relations (Jun 2014)

Mr Stapleton Roy (Moderator): I would like to welcome you all to what has been billed as a conversation with the Prime Minister of Singapore.

My name is Stapleton Roy. I am a retired Foreign Service officer who is now with the Woodrow Wilson Centre.

Let me briefly say a word about the Prime Minister. I have known him for decades now, since I was ambassador in Singapore, back in the middle 1980s. Rather than running through a biography much too long to cover in the time we have allocated for the entire conversation, I would like to simply point out that he represents a model of perhaps how we should be selecting our top leaders. He began in the military, rose rapidly to the rank of Brigadier-General, which in Singapore is much closer to the top than a Brigadier-General is in the US military structure. He was elected to Parliament in 1984, served twenty years in Parliament before becoming Prime Minister. During that period he was Finance Minister, he was Minister of Trade and Industry, he was Deputy Prime Minister for 14 years, and now he has been the Prime Minister of Singapore for nearly 10 years — a remarkable record, a remarkable experience to take into the top office in Singapore.

Mr Prime Minister, we are very happy to have you here, and I wonder if you would like to lead off by framing the conversation in whatever way you choose. We are on the record, incidentally.

PM Lee Hsien Loong: Well, I am in Washington this time for three reasons. The first reason is it is the 10th anniversary of the US-Singapore Free Trade Agreement (USSFTA), which was begun with Bill Clinton, finished with George W Bush, and has served both countries well for the last 10 years. Not just in its direct benefits to America and Singapore, but also in its indirect effects in the broader relationship between Singapore and America, which extends to security, anti-terrorism, education, cultural cooperation and all sorts of fields, but also America’s broader relationship with the region, because it is a signal that it is advantageous and sensible, to deepen ties with the US — economic ties — and perhaps it makes sense for other countries also to think about this. And it has led to other deals which the US has had with Asia, with ASEAN, with Korea. I would not take credit for all the good things which have happened but this was a signal early in the process. So that is the first reason.

The second reason I am here is because we are in the midst of, and hopefully towards the end of, negotiating the Trans-Pacific Partnership (TPP). It is another seed which we planted in Singapore, quite a long time ago, with a few other small economies in the Asia Pacific. Singapore got together with Brunei, with New Zealand and with Chile, and we formed what we call the P4 free trade agreement. Our trade was not very significant, but we saw this as a nucleus on which we could grow a tree, and we hoped that in time other countries could come and join in and participate in this, and we would be able to develop towards an Asia-Pacific free trade scheme of some kind, which would be significant.

And the TPP is the offshoot of this P4 which we planted. You probably know about it. America is a part of it; so are your NAFTA partners; so is Japan and Australia, Singapore, Vietnam, Malaysia and a couple of others. And it is very consequential. Consequential because it accounts for 40% of the world GDP, consequential also because it is a signal of America’s commitment and seriousness as an Asia Pacific power, which it has always been and determined always to remain. And it has almost been completed. I think there are some small issues, only to do with rice and vegetables, rice and beef, something like that, with the Japanese. We have more or less settled our issues, and so have most of the other countries. And it awaits just a last step to being completed and then the crucial steps to be ratified after being completed. And that depends on your electoral timetable and the pleasure of Congress and we hope there will be support to ratify that because it is important to the US, economically as well as strategically.

And I say strategically because that is the third reason I am here. The President has talked about rebalancing towards Asia, and the importance of Asia to America. And we strongly support that. And we understand that for that to be meaningful and to have substance, it cannot just be talk, it cannot even just be security, which is important, but it has to be a broad engagement of the region, and you have to have policies, measures, specific projects which you work with the partners in the region where it is win-win, and people say yes, America is a good and worthy friend, and I am on your side. And the TPP is one serious measure which shows the seriousness of your purpose.

The region is changing. China is growing, developing, becoming more influential and will become more so by the day. There are many opportunities in the region. There are also tensions and complexities in the region, between China and Japan, between Japan and Korea. Within Southeast Asia, each country has its own political dynamic. Between China and SEA, we want to be good friends and we are good friends, but we also have issues like the South China Sea disputes, which involves several of the ASEAN countries, and in a sense ASEAN as a whole. So it is a region where things are moving, and which America is part of and has to engage in actively.

And you have many other issues on your agenda. Iraq preoccupies you, so does Iran, so does Syria, so does Eastern Europe and Ukraine. But we hope amidst all that busy platter, you remember at least once a day that in Asia you have many friends, many interests and many investments, and it is in many countries. And we wish you well, and we hope to deepen that relationship.

Moderator: Prime Minister, let me pick up on some themes in your remarks. There is a lot of worry about the relationship between United States and China. And both countries have agreed to try to create this new type of major power relationship that can stabilise, contain, and hopefully reverse this growing strategic rivalry between the two. But at the same end, we have TPP and other positive developments that are trying to retain an open Asia. But you referred to these tensions in Asia. And if you compare the current situation to the situation in Asia 10 years ago, it is easy to see that 10 years ago the overwhelming aspect of the trends was positive — the Declaration on the Conduct of Parties (in the South China Sea), the China-ASEAN Strategic Partnership, China and Philippines were planning a state visit by the Chinese President to the Philippines, trade between Japan and China was rising, and China soon became the top trading partner in Japan, and we were in the six-party talks with North Korea, and a year later we were able to reach the September 19th joint statement, in which North Korea committed itself to ending its nuclear programmes and rejoining the non-proliferation treaty. And now as you mentioned, we have these severe tensions between China and Japan, between China and South Korea…

PM Lee: Well not between China and South Korea.

Moderator: Excuse me, between Japan and South Korea. No, actually China’s relations with South Korea are very good at the moment; I was just recently in South Korea and saw this first hand. We have the disputes in the South China Sea. In other words, great power rivalry factors are becoming much more important in East Asia, than at least on the surface appeared to be the case 10 years ago. Singapore is a small country that hits way above its weight in the international community, but which nevertheless has to be vulnerable to negative trends in the region. What is your sense as to what prospects are for reversing these negative trends and getting Asia back on an overwhelmingly positive loop?

PM Lee: I think if you compare where we are today with 10 years ago, it is not just the negative trends which have become stronger, but the positive trends also; it is both. What has happened is that the participants have become stronger, their interactions have become more intense, and when you are managing intense interactions, there is great benefit but also great complexity. So the trade volume between China and ASEAN or China and Japan is much huger now than it was 10 years ago. The people movements — tourism, students, business people moving — the volumes are much greater than before. Even trans-pacific, between America and China, your trade, your investments, your degree of interconnectedness is much greater than before.

But at the same time, because the countries have become stronger and interactions are more, you have more friction points which emerge. The Senkaku or Diao Yu Islands are one, which have been there between China and Japan, and that has heated up in the last couple of years. The South China Sea is an issue between China and several of the SEA countries, and that has also significantly heated up over the last couple of years. I would say that none of the SEA countries want to have a fight with China. In fact, China too goes considerably out of its way to develop friendly relations with ASEAN, and we have very thoughtful, comprehensive, committed plans to do that.

But there is this issue of the territorial and the maritime disputes, and it is not easy to resolve because of another factor which has changed in 10 years, and that is that nationalism has become a stronger sentiment, and a stronger factor in influencing governments. Certainly you see that in the present Japanese government’s approach towards normalising the country, which is a deeply felt over-riding objective of Mr Abe, and certainly that is true in China too, not just among the intelligentsia but even amongst the population. China has hosted the Olympics, China has become successful, China is standing up again, and we will take our place in the sun. And in these circumstances, when you come into contact over islands and waters, it becomes difficult to resolve.

I think the correct answer, from America’s point of view; I do not think America uses the term a new model of great power relations. The Chinese say that. The Americans just say a new model of US-China relations, which is I think a more reassuring term to non-great powers. And the right approach to that, is not to pull back, neither to be just lovey-dovey, but to engage constructively but at the same time understand where your vital interests are and be quietly firm where vital interests are involved. And I think that is what the Chinese are doing, and I am sure they expect the Americans to do no less.

Moderator: When we look at the future, we not only worry about the role that China will play in East China, we worry about the quality of the US-China relationship, but we also worry about China itself. China has been growing very rapidly. Its growth has been good for the region, but it is also giving, on one hand, China capabilities in the military sphere it did not have before, and it is creating problems within China, disparities in the distribution of wealth, social changes that are inherently destabilising.

Two years ago, you visited the Central Party School of the Chinese Communist Party and gave what I thought was an extraordinarily thoughtful speech in which you both looked at developments in China and at regional issues, and I was struck by one phrase in your speech where you said that "China needs to upgrade its economy, to continue improving people’s lives. It has to restructure from an export-led economy to a more sustainable demand-driven one. It must prepare for a rapidly-aging population, strengthen social safety nets and address rising income inequality. It must also undertake political reforms to meet rising public expectations for accountability while maintaining social order and stability."

Now, what struck me when I re-read your speech was that if you compared this to the bold programme of reforms that were announced at the Third Plenum of the 18th Central Committee last November, it looks as though China actually, for its own reasons, is, indeed, trying to address a lot of these types of issues, and if they do so successfully, it could provide a base for successful continued rapid growth. But if they stumble in the process, it then raises the problem of instability in China as a long-term regional concern. I wonder if you could comment. Do you think that China is, in fact, trying to do the sorts of things that inspired your thinking on the subject?

PM Lee: Yes, I think they are trying to do that. They have seen rapid growth. They have seen the problems which this growth has generated — inequalities, pollution, social tensions. Of course, it benefited from the resources which the growth has provided them in quality of life, in standard of living and influence in terms of their defence capabilities. But they know that they have to address the problems which have arisen and it is not just a matter of economic policy. It is also what they have now called ‘social management’, which means, how do I maintain harmony within the society, and it also has to address how the political system is going to work. They are not going to have primaries like you do for a very, very, very long time to come, but they know that they have got to find some way to engage the population, which can follow what is happening and will increasingly want to have some kind of a say.

Deng Xiaoping used to say you cross the river one stone at a time. But if you look at these three problems — the economic part, I think crossing the river is less of a difficult challenge because there are models for economic development, for how you are going to transform your workforce, your industry, your productivity. The World Bank has ideas and so do many academics who have studied so many countries. (But) There are very few models for transforming a society like China. There are even fewer models for designing a political system which will work for a society which is changing in the way China is changing, on that scale, with that history and culture, and that need for stability but also openness, and the opportunity for different voices to be expressed.

They know this. They have taken the task very seriously. I think before their Third Plenum this year, they spent a long time consulting internally before they came up with this document which was finally adopted. So they know what needs to be done, and Xi Jinping, I think, is personally engaged, chairing many of these Leading Small Groups himself in order to bring the pieces together. He cannot do it all himself, but his commitment will make a big difference to get moving a huge system which inherently has a lot of inertia. And so we have to wish them well.

From an outsider’s point of view, what the Chinese do domestically and succeed, that is good. But what is most important is that as China grows in its influence in the world, it is able to fit in into the world and into the world order, in a peaceful and a non-disruptive way, with its interests accommodated and yet welcomed by other parties, as a constructive player with something to contribute, the way the US has been in the Asia-Pacific for 70 years since the war or 60-plus years since the war. And if the Chinese can emulate you in that respect, I think it will be a great achievement.

Moderator: Let us turn to Southeast Asia, a region that you are intimately familiar with. The collective growth rate of Southeast Asia continues to be among the highest in the world, but there are problem areas in Southeast Asia. We have the fact that four of the 10 members have territorial disputes with China. We have political instability in Thailand, severe political instability. We have upcoming presidential elections in Indonesia, and Indonesia is a big heavyweight in Southeast Asia. Are the trends in Southeast Asia moving in the right directions? How confident should outside observers be that ASEAN will be able to retain the degree of solidarity that has surprised the world by displaying it over the last several decades?

PM Lee: We are not a single united states of ASEAN. We are not even the European Union. We are 10 independent countries making common cause on issues which affect sometimes all of us, sometimes many of us. And we know that if we want to be relevant in a regional architecture, then speaking together makes a lot more sense than speaking separately. I think that there will always be differences in strategic perspectives and postures of the different countries. It must be different. If you are Laos, land-locked and adjacent to China, as opposed to Indonesia, an archipelagic state with more than 230 million people and a significant regional power, your perspective will be different, your stance will be different. And so ASEAN will not have one foreign policy or one defence policy, but we hope that we have enough consensus that when something happens in our region which, because it is in our neighbourhood, affects the tone for the whole neighbourhood, we can take a stand and have a coherent and a substantive view, as we are trying to do over the South China Sea.

Not all ASEAN countries are involved with disputes. We do not all have to have a dispute in order to make common cause. We do not take positions on the individual territorial claims because, in fact, some of them are between ASEAN countries. You cannot say who is right and who is wrong, but that you must deal with this in accordance with international law, including the Convention of the Law of the Sea, that you must deal with it peacefully and with moderation, and that we need a code of conduct so that you do not have accidents at sea and escalation and unnecessary conflict and unintended conflict. I think these are things which ASEAN has a view on, and which ASEAN has expressed their view on, and I think that is constructive.

Moderator: You picked me up on my mis-statement, to correctly note that South Korea and China have very good relations at the moment, at a time when the two very important US allies in Northeast Asia — Japan and South Korea — are not getting along well together for a variety of reasons. But we also have the Sino-Russian relationship which, because, partly, of events in Europe, seems to have been propelled to an even higher level of cooperation through the conclusion of this long-term gas supply agreement that was hammered out a month ago.

PM Lee: Yes, in Shanghai.

Moderator: That is right. Should the United States be concerned when South Korean relations with China are significantly improved from the low point of three years ago at the time of the Cheonan Ship incident? Should we be concerned about good relations between Russia and China? Will this impact on East Asia in a way that is likely to be detrimental to the security interests in the region?

PM Lee: Well, first, I think you should be concerned that your treaty partners have good friends in the region, because if your treaty partners are at odds with others in the region and you are their partner, there are implications for you. South Korea is a treaty partner. Japan is a very important treaty partner. And I think that one of the reasons why South Korea is getting along well with China is because it is having some difficulties with Japan. And one of the reasons Japan’s difficulties are with not just China but also South Korea is because of the reopening of the issues which go back to the Second World War and before, and which have never been properly put to rest, the way they were put to rest in Europe after the Second World War.

So it is really a sovereign choice for the Japanese to make, but as a partner of the Japanese which wishes it well, I am sure that you will express the hope, as I think Vice President Biden has, that Japan will act cautiously and circumspectly and will try to develop its relations with its near neighbourhood, China and Korea. They cannot do it themselves. It takes two hands to clap. So you need the Chinese as well and the Koreans to be part of it. But unless you can put the Second World War behind you and not keep on reopening issues of comfort women, of aggression, of whether or not bad things were done during the War, I think that this is going to be a continuing sore.

Between China and Russia — this is an old play. When the Soviet Union had difficulties with America, America made friends with China. Now that America has difficulties with Russia, the Chinese, they will make friends with Russia. And the Chinese have some issues with you, but they will make friends with Russia. So this is par for the course. But the Russians are 200 million or less, shrinking and they cannot substitute for what America brings in terms of markets, technology, investments. For that matter, they do not supply as many US Treasury Bills and I think the Chinese know that. So I do not believe the Chinese will want to rupture their relations with you at all. They will want good relations with you, but they will expect, they will approach it in a muscular way, and I imagine so will the United States.

Moderator: We have about 30 minutes left. I would like to turn to the audience. I have 10,000 more questions that I could ask myself, but I would think we would probably get a greater variety of issues if we give the audience the chance to ask some questions. I would like to remind everybody that one, we are on the record, please wait for the microphone and speak directly into it. Please stand, state your name and affiliation before asking your question, and please keep questions and comments brief. We have a lot of people in the room and we would like to give everybody a chance to ask their questions. With those ground rules, the floor is open.

Question: Thank you, Prime Minister. My name is Deng Huiyu, with China Review News Agency of Hong Kong. Singapore was playing a very positive role in facilitating or even mitigating the cross-strait relations in the past. How do you see the current situation of the cross-strait relations? Is Singapore continuing to be willing to play a positive role in promoting the cross-strait political dialogue, such as Xi Jinping and Ma Ying-jeou’s meeting? Thank you.

PM Lee: Well, we, like many other countries in the world, have an interest in having stable relations across the straits between the Mainland and Taiwan. We do what we can to help but we are not the mediator. You can have the United States mediating between the Arabs and the Israelis. Singapore is not in the position of the US. What we have done is to be helpful to both sides and when the two sides wanted to have a dialogue between Koo Chen-fu and Wang Daohan back in, I think, 1992 or 1993, we provided the venue. So, the Wang-Koo talks which came up with the "one China, to each his own interpretation" — 一个中国，各自表述 — we were the host for that meeting and that declaration, not more.

The Chinese have made quite clear that this is a family matter, and we are not family. We may be distant relatives, but we are not family. So we understand that. There are now, of course, many more contacts directly between China and Taiwan. So it is entirely up to them how they find us useful, and if they do, we will be happy to oblige and do what we can.

Question: Edith Brown Weiss, Georgetown Law School. Mr Prime Minister, what do you see as the two or three biggest challenges in Singapore within the next decade, and any thoughts on how you intend to address them?

PM Lee: Well, one big challenge is demography; demography because we are not producing babies to reproduce ourselves. An average woman produces 1.2 babies, and that is not enough to replace her and her spouse in the next generation. And if you extrapolate that to the middle of the century and beyond, you can calculate how we are going to decline. That is a very big problem for us, as it is for many developed societies. In fact, it is a problem for every East Asian society, and especially, city. If you compare us with Hong Kong, with Shanghai, with Korea, or with Japan, we all face the same problem. None of us have found a good solution.

We are doing what we can with baby incentives, with tax incentives, with childcare facilities. We are also topping up our population with immigration, but you cannot go too far because it has to be essentially a Singaporean country, and the next generation must be mostly born in Singapore, not necessarily all, but mostly, and so there has to be a balance. But how do we get more couples to marry earlier, and to have a few more babies? That is one very big challenge.

I think another very big challenge for us is that we are a city, and yet we are a nation. If you are New York, well, you are a city. There is a United States, you belong in the United States. You can rev the engines and go ahead, and you can bring in people from all over the world, and you become one of the leading cities in the world in terms of talent, in terms of entertainment, in terms of financial services, in terms of buzz. Now, if we are going to prosper, we must be one of the leading cities in the world, because otherwise — any number of cities in Asia which have three million population or even five million population — what makes us stand out? That in Singapore, talent can come, talent wants to come, and our own talent has every opportunity to develop, to grow, and to become outstanding, and to be able to contribute beyond just in Singapore, in the region to do business or overseas internationally, to have a diaspora, and to have that identity that Singapore is a place which is special and where the human spirit flourishes.

How to do that and yet preserve the Singaporean-ness of this country where people do national service? They serve the nation, they identify themselves as Singaporeans. You can be comfortable anywhere in the world. Washington DC is quite a nice place to be but I am going home to Singapore. Now, that is a challenge which is going to be with us for longer than the next 10 years. We speak English, we are educated, fully plugged into the global system. Our people are comfortable wherever they go, and they go many places, and we want them to go. But we also want them to know where home is. Now, that we have to work hard to maintain.

Moderator: Last winter, here in Washington, the thought of going to Singapore was constantly on my mind.

In the rear there. Please identify yourself.

Question: I am from the Voice of America. Prime Minister, just now when talking about the South China Sea issue, you talked about international law, that ASEAN is for international law to solve dispute. And we know that China has declared that international law does not apply here. So how do you look at the tension?

PM Lee: I do not think that China has quite said that international law does not apply to this. I think what they have said is they have claims which existed long before international law came into existence, and these have to be given due weight because international law does not go back to things which preceded it. I am not a lawyer, so I presume there is some plausibility in that argument, but from the point of view of a country which must survive in an international system where there are big countries and small, and outcomes cannot be determined just by might is right, I think international law must have a big weight in how disputes are resolved.

And if you are a big country, well you bend the rules. The US is a big country. There is international law, but you have not ratified United Nations Convention on the Law of the Sea (UNCLOS), you have not subscribed to the International Criminal Court, and there are other occasions where if things go against you in World Trade Organisation (WTO), well, there are a lot of people who say, why do I have to follow this? But because the US generally follows international law and people see the US as a country which is rule-abiding and law-abiding, and not just a country which is on top because might is right, therefore the US enjoys respect and even affection, and people accept and welcome you around the world. And if China can reach that position, I think it will have made a great achievement.

It is, of course, up to each country to choose how you are going to do this, and great powers have their own logic and their own calculus, and nobody can say how it will develop. But I know the Chinese have seen other great powers which have tried to rise by might. And they have cited the examples of the Spanish and the Portuguese and the German Reich and the Soviet Union and the British Empire, and they have said all those have come, risen and fallen. And they are trying not to make the same mistake. And I wish them every success in avoiding it.

Question: Thank you, Mr. Prime Minister. My name is Roland Amore. I'm with Oppenheimer. The emergence of Shanghai as a financial centre has expanded the Asian financial centres from Hong Kong, Singapore and Shanghai, which has the potential to grow quite rapidly and quite large. What are the economic impacts of that? Let me carry it one step forward. What China needs economically to be the superpower is, either their currency is a reserve currency in the world, or some third-party basket of commodities, and so forth. How do you see that dynamic playing with the growth in the expansion in the Shanghai markets and what will happen to Hong Kong and Singapore in their relative standing?

PM Lee: Well, I have no doubt that Shanghai will become a great financial centre. It is already a very important financial centre because China is a very important economy, and Shanghai is the financial centre where the banks are, the institutions are. I am sure all the consultants and all the law firms will come. Whether it can go beyond that and become a financial centre for the region — that is not so easy to predict.

You look at Tokyo. Their economy is the second biggest in the world, or third — depends on how you count it. It has got big banks, insurance institutions, but it is not the regional hub for financial services in Asia. It is very domestic-focused, and if you are looking for regional business, you go to Hong Kong, you may go to Singapore, you may go to Sydney. There is a different ethos, different culture, different connectedness. So each of us, we have our own niche, and we prosper together — some rivalry and competition in a friendly way, but the Asia-Pacific is big enough for all of us, and I think it is big enough for Shanghai as well.

Shanghai, of course, can become more open than Tokyo. They speak Chinese, but they are very welcoming to international talent and management coming and staying, and it is a very liveable environment. The skies may be a bit grey, but the culture, the history, it is a good city to live in. And I think that is a factor which will be relevant to developing a financial centre.

The renminbi and its international role — I think that is something which the Chinese have been thinking hard about. They are taking some steps in that direction. They have allowed more international use of the renminbi. They are having clearance banks in London, in Singapore, in Hong Kong. I am sure they have done it in New York as well. I do not have specific latest.

But to go from being a national currency to an international one which others want to hold and settle, you need free capital movement. The Chinese do not have that. You will need to have a completely reliable domestic political and legal system, which the Chinese will be developing. You need to have the financial markets where you can trade, maybe every millisecond. I do not think the Chinese are ready for that. You need to have several trillion dollars of paper circulating, and the assets which people can invest in, trade in, the liquidity.

I think it is a long way and if you look at the Euro, which has many more of these preconditions, they have not become the currency of choice for international trade. I mean there is some settlement in Euro, there are some balances of reserves which are held in Euro, but the US dollar is still the preeminent currency. We worry about that because if something goes wrong with the US, well then the whole financial system will go wrong worldwide, but if something goes wrong with the US, I think many things will go wrong worldwide.

Question: Good afternoon, Prime Minister. My name is Douglas Paal from the Carnegie Endowment. In the United States and elsewhere, there are a lot of complaints about Chinese cyber theft of intellectual property and, of course, in lots of parts of the world, a lot of complaints post the Snowden revelations. Do you have some ideas of how we might approach more constructively the big gap between the US and China and other countries on how to manage the cyber sphere?

PM Lee: I am not sure what the gap is. I think after post-Snowden, people think that every country does what every country needs to do. And you could make a distinction between cyber intrusions for commercial purposes, and cyber intrusions for national security purposes — of which the second is okay but the first is not. But I think in practice, you will find that quite difficult to operationalise. I think the only solution to this is to put up your guard, and assume that these are things which many countries do. And the Chinese may be smarter at it than others, and may do more of it than others. And if they are in flagrante and caught, well, if it is politic, you expose it. And if they cannot stand the embarrassment, they will have to change. After Mr Snowden — who did America an enormous amount of harm, even though you actually did not do any bad things — you have felt constrained to change some of your operating norms, and you are a different kind of society. But on the international arena, I think what other people think of you does count for something, however big and powerful you may be, and that applies to China as well as to the US.

Question: Thank you, Mr Prime Minister. I am Bill Nash, a retired soldier also. I would like to shift the conversation, if we could, to democracy and human rights. And I ask you for a brief survey of your views of those two items developing in Southeast Asia, and as you do your survey, would you make sure you stop in Thailand, Cambodia and Indonesia?

PM Lee: I think different countries have different perspectives. America, with your history, with the Declaration of Independence and the Bill of Rights, you put these high up on your scale of values. In Southeast Asia, the countries do value human freedoms and welfare, but they also have other priorities and political imperatives. And if you look at the way the countries are developing, whether it is Vietnam, whether it is Indonesia, whether, for that matter, it is Myanmar, I think people realise that if you run a regime which does not further the welfare of your people and does not enjoy the support of your people, whether by elections or not, you are on a dead end.

The Vietnamese may not have elections like you do, but they are very sensitive to ground pressures. And when an issue comes up, they have demonstrations and objections which they find not so easy to put down — objections not just to foreign issues like their dispute with China, but domestic issues like corruption — and they have to respond to that. In Myanmar — you call it Burma — the previous military regime changed, partly maybe you pressured them from externally, but I think substantially also because the generals themselves knew that where they were, they were headed into a dead end. There was no future. The people knew there was no future and hated the status quo. They had to change. And so they are onto a new path which is going to be a very difficult one, because when you go into democracy, new demons are let loose. Suddenly, you now have Buddhist populists fighting Muslims — not just Rohingyas in Rakhine State, but Muslims in the body of Myanmar. And even Aung San Suu Kyi, who is a saintly person, cannot easily stand up and say, "This is wrong", because then you will antagonise 95 per cent of the population or more who are Buddhists. So it is going to be a difficult path for them.

If you look at Indonesia, they went from the Suharto New Order regime to one where elections are held. They have had quite a number of changes of presidency since Suharto, and quite a range of individuals and governing styles as President. The last 10 years have been stable because with President Yudhoyono, he brought in a technocratic team and a measure of stability and predictability, and restraint which enabled Southeast Asia to be stable and not to be shaken by problems within Indonesia. And I think that has been good for the population of Indonesia and we are grateful for that. And we hope that with this election now under way and polls going to be held on 9th of July, the next Indonesian President will continue the good work.

So I would look at democracy and human rights like that —what does it deliver for the welfare of the people, for the stability of the country, for the opportunities for the next generation of the population? And if you can deliver that, well, that is more important than the forms and the precise way the rules are expressed.

Question: Thank you, Prime Minister. My name is Zhang Hong. I am from China Caixin Media. So China has really learnt a great lesson from Singapore’s economic openness and the way Singapore integrated its economy into a global economy. And Chinese scholars and public intellectuals are also trying to draw lessons from Singapore’s political system. So what do you think is the right conclusion to draw in Singapore’s experience — the evolution of Singapore’s political system from your father Minister Mentor Lee Kuan Yew’s era, to what you are trying to do with Singapore’s political system right now? What do you think is the right conclusion to draw for China? Thank you.

PM Lee: I think for China, they are not looking to us to solve their problems. They are looking to us as one interesting model. I describe it as a bonsai. We are a small tree; they are an enormous fraction of a continent. And they are saying, "This is very interesting. Now, what can I take up from here?" It is a laboratory model. From my point of view, the laboratory model is our life. It has to work. From their point of view, well, it is one idea which you can see what you can pick up and how you are going to apply it.

And I think they have found our model useful because we are Asian — majority Chinese, not completely Chinese in our culture anymore because we have a significant non-Chinese minority population, also because we have been colonised by the British 150 years and we work in English and we are plugged in to the Western world and Western norms. And they would like to understand how you can make the system work, which is clean, which is stable and which has elections, and people accept this and people feel that this is their country. So on that basis, I think we tell them, if you find us interesting, please by all means come and take a look, but we are not holding ourselves out to you or to anybody else as a city on a hill.

From our own point of view, the conclusion is you will never solve any problem permanently. We have solved many problems, coming where we are in the last 50 years, becoming a nation, developing the economy, entering the First World, at least in standard of living, education, defence — so many specific issues which we have to overcome and make successes of in order to be a successful country. But as you solve one problem, new issues arise. It is in the nature of human societies.

So we are at this level; well, we now have new problems. I talked about the problems of demography, having enough babies, about a national identity. You have issues of inequality, like in every developed country. We have concerns about wages not moving up enough, concerns about social solidarity, concerns about how we are going to make our living in the world — a world which is not tolerant of failure. And we are a small country. If we turn turtle, you do not turn back up again. And that is something which we have paramount in our minds, and which a subcontinent or continent like the US or China, you can treat with a great deal more equanimity. And, well, we accept that you are in a more comfortable position, but please understand, I am in a small boat.

Question: Thank you, Mr Prime Minister. My name is Alex. I am with the United Daily News in Taiwan. My question is about TPP, because you mentioned that one of the reasons you are here is about TPP. I wonder how soon will you expect the TPP will be concluded? And Singapore and Taiwan signed FTA last year, and Taiwan has expressed its willingness to join TPP. What is your viewpoint about Taiwan’s participation in TPP? Thank you.

PM Lee: Well, I think it will depend on China. I mean, it will depend on the other countries in the TPP group, whether they would want to bring in Taiwan as a new partner. They so far at least have all been APEC economies. Taiwan is too, but these have all been countries. I think when you join a trade negotiation, it is never purely an economic calculation. It is also a political one. So the other countries must be quite convinced that this is a step which will not impair their relations with any third party. And so I think it will take some time. It is not something which is completely ruled out.

I think for that matter, even China is looking at the TPP carefully. They are not members. They started off — well, disdainful perhaps is not quite the right word, but — clearly, not intending to participate. But now, I think they are looking at it carefully and they will study the matter. And if the terms are right, and the politics is right, I can imagine that the TPP could be one way in which one day, the US could have some arrangement with China, more easily than if the US directly had an arrangement with China. And whether that will make possible other developments, other participants or Taiwan, well, that is very difficult to say now. But, never say never.

Question: Amy Wilkinson with the Harvard Kennedy School. My question is, given that Singapore is such an economic hub in the region, how do you think about attracting entrepreneurs, entrepreneurial talent or venture capitalists that would invest in the next technologies?

PM Lee: We try to do that in different ways. First, by attracting talent per se, because we think that if you are going to prosper you must be a magnet for talent — in terms of opportunities, in terms of the ethos of the society, in terms of the quality of life, in terms of the ease of doing business and getting new things done. We have specific schemes in which we try to incubate new companies, where venture firms can get started and venture capitalists can come, and you can have an ecosystem of — what do you call it, not godfathers — angel investors, hedge funds; all the whole range of people who invest in the tech and IT — venture arena. We have had modest success and some of our companies have been bought up out onto Silicon Valley and done quite well, and I hope there will be more.

But the challenge is that you need to bring in a sufficient constellation of entrepreneurial talent. And you also need that base market, which in Silicon Valley you have the whole of the US. In Singapore, it is a smaller market, so you have to start up in Singapore and be able to project beyond that into the region and maybe even into the US. And some will do, and we hope more will do.

Moderator: Prime Minister, we have just about run out of time, but I was very struck in your Central Party School speech by a sentence in which you noted that of the eight ethnic Chinese who have won Nobel Prizes in Science, all were either American citizens or became American citizens. My question is, is China catching up in this area? In other words, is China developing a scientific community and a spirit of innovation that will alter that picture so that ethnic Chinese who are Chinese citizens may be able to win Nobel Prizes in Science in the future?

PM Lee: I think they are trying. I do not know how far they have gone or how successful they have been. I think their universities have very high quality people. If you can get into Beijing University, it is harder than getting into Harvard or Stanford or Yale. But to have that openness, not necessarily political openness, but even academic openness, and not to have a hierarchical structure within the system where the professor is a boss and everybody else takes his turn, that is something which is not easy to replicate.

The Japanese have had modest success. They have had a couple of Nobel Prize winners. The Chinese have not yet. I think they will try very hard to do that. I made that point in the Party School because there is a perception in some quarters in China that America is a country in decline. I mean, you ran into trouble in the global financial crisis. It shows some moral weakness and decay in the system, and that is the past. And I wanted them to realise that this was not so, and America is not to be written off. And there is a lot of energy and resilience and talent which they are able to make use of, which China is trying to do but has not done to that same extent yet. I think they heard me. I am not sure they fully appreciated that message, but I meant them well.

Moderator: Do you think that, as Prime Minister of Singapore, that China or Singapore will be the first to have a team in the World Cup?

PM Lee: I will take my bets 10 years from now.

Moderator: Prime Minister, thank you very much.

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