PM Lee Hsien Loong at the Aspen Security Forum

Evan Osnos (Moderator):  Prime Minister, thank you very much. You hit on a number of issues, which I think are very much top of the mind for the people here in the US. I want to follow up if I can please, on what is really one of the core points, which is this question of the US-China relationship. As you know, US Secretary of Defense, Lloyd Austin was in Singapore just recently and he attracted some attention because he said that China's claims and actions in the Indo-Pacific, as he puts it, threaten the sovereignty of nations around the region.

We are now in this period here in the world of China analysis (that) does not yet have a name. We are no longer in the era of engagement with China in quite the same way we were. The Biden administration talks about what it calls, extreme competition. I wonder if you would share with us your level of concern today about the state of affairs between US and China. Where are you on the temperature scale, how concerned are you and where do you think it is heading over the course of the next few weeks and months ahead?

PM Lee Hsien Loong:  Well, we are concerned. This is not a burning issue which will explode on you tomorrow, but it is a progressive issue with very serious consequences. It comes down basically to how the US sees China and how China sees the US. And for a long time, the US saw China as a country you could work with. You have disagreements, you had many disputes, many issues on trade and currencies, and human rights and so on, but basically, there was space for them. You talked about responsible stakeholders, and you looked to China to be one of them.

China was quite happy to be in this flanking position. They were not in a position to challenge you, but they were happy to fly in your wake, and enjoy the tour. But it has reached a point where China is not so small anymore. It has grown dramatically. It continues to grow, although people say it is aging and the growth rates are slowing down. Its ambitions have grown together with its ability to influence events in the region and in the world. But especially in the region, because it considers Asia as its near abroad, if you use an old Soviet era term or Russian term.

Now from America's point of view, you are seeing a competitor – one which has strengths; one which is challenging you, perhaps not challenging you ideologically, the way the Soviet Union did, but challenging you as alternative centre of influence and prosperity, and vying with you, certainly for its space in Asia. You have to decide how you are going to react.

For a long time, the Americans are quite confident. Do not worry; we will have free competition, let the best man win. And you have no doubt, you would say quietly, the best man shall be the United States. And now you are not quite sure of that last bit. So, you say well, I must win one way or the other and I still believe in competition, but I would like the competition to be fair.

It is a very fine line from that to treating the competitor as the opponent or an adversary. President Biden has said there will be extreme competition, but he does not need conflict. Well, we all hope so and we all hope that the line is clearly drawn, but it is not easy to maintain that line, because I think within the US, there is a strong bipartisan consensus that the old model is broken and you need to take a more robust approach, and one which will to some considerable extent, lead at the very least to bifurcation of technology, of access to talent, even of capital markets.

On the other side, I think rhetoric says all the right things that there is a multilateral world; there is no single centre of wisdom or power; we all have to work together and win-win is much better than win-lose and all these things are true. But at the same time, the Chinese have looked at America and say, is this a country which is going to countenance my rise, or is this a country which wants at the very least to slow down my emergence?

I think that after what has happened over the last, is more than one administration, A significant number of people in China, probably at a high level, have concluded that you cannot safely assume that intentions will always be benign. And so, in this dynamic, to try and restore trust and work with one another – I think that takes statesmanship, courage, as well as political leadership domestically in both countries. Because in America, if you take Pew surveys, the mood is strongly against China. And if you take China, they have domestic opinion too. The domestic opinion is extremely nationalistic and wolf warrior diplomacy is very popular in China. In the meeting at Anchorage, it is part of the theatrics, but I am not sure if it is the right first act to play, which ends up with a happy conclusion. That is what many countries worry about.

Mr Osnos:  You mentioned a couple of times the sense that in Washington, this harder turn towards China is now a bipartisan position. I think it took a little while for that idea perhaps to be absorbed in Beijing. It felt as if this was an artifact of the Trump era.

I know Prime Minister that you are vigilant about not giving advice to your friends in foreign governments. You try to share your views, hear their views, but (could you) share with us your sense of how you have sought to explain to the Biden administration? Then we will talk perhaps about to Beijing. What is the message that you want the Biden administration to understand about this moment in US-China relations that you think may not be getting through in the usual discourse of the public?

PM Lee:  There are many issues, there are many disputes, there will be many legitimate grievances even on both sides. But the reality is neither side can put the other one down. I think there is a possible misunderstanding on both sides, because in China people say the East is rising and the West is declining. Some people believe and write about it, that America is in terminal decline. I do not think so. I tell them you look at all the science and medicine Nobel Prize winners who are ethnic Chinese. All of them were either American citizens or became American citizens, except for one, who is a Chinese citizen.

There is a moral in that. America is able to attract people from all over the world, (has) great talent and vibrancy and ability to reinvent itself, and (could) pick itself up again after it appears to be heading irrevocably in the wrong direction for a long time, which sometimes happens. On the other side, I do not know whether Americans realise what a formidable adversary they would be taking on, if they decide that China is an enemy.

You have spent 20 years in Afghanistan. You have spent quite a long time in Iraq. These are small countries. But China is not going to disappear. This is not the Soviet Union. It is not the Potemkin village front. This is a country with enormous dynamism, energy, talent and determination to take its place in the world again.

Some of it, no doubt, is because of (what) Chinese would call it mass line work, but a skilful presentation of a view of the world to the population. But a lot of it is very deep pride and confidence in a population which feels that it has been downtrodden, perhaps has had the victim narrative put into them, a bit more than others might have done. But rightly, remembering where they came from, and determined to go forward, and they are not going to disappear.

So in this situation, I would say to both: Pause, think carefully before you fast forward. It is very dangerous.

Mr Osnos:  On that score - and we do have a range of other topics we are going to talk about today - but before we leave the subject of the US and China behind, I think there is something that is very much on people's minds these days in Washington. And that is the subject of Taiwan. As you know, there have been headlines everywhere about the possibility that there could be a Chinese move towards Taiwan, and some think that it would seize greater control, that it would disrupt the status quo. How concerned are you about the risks of a Chinese move like that?

Just for folks who are listening but may not remember, a couple of data points. The Head of Indo Pacific Command said in March that he believed that China was on course to have the capability within the next six years or so to take control of Taiwan. The Chairman of the Joint Chiefs spoke recently on the subject. Help us set our levels if you would Prime Minister. How concerned are you? What do you think the likelihood would be and what would the impact?

PM Lee:  My take - I do not think they want to make a unilateral move. But I think there is a danger, and the danger is of mass miscalculation or mishap. So you are not in a dangerous position but you can get into a dangerous position quite easily. For the Chinese, Taiwan is the mother of all core interests. I mean it is the most important national subject for them, and Taiwan independence is an absolute bright red light. Mr Xi has put Taiwan reunification as part of his great rejuvenation vision, but actually it is not just President Xi who has this vision. This is in fact the unanimous view throughout China - the intelligentsia, the armed force, even the population. It is a very deep view and it is a reality. That path ahead in the first instance under Deng Xiaoping, the idea was one country, two systems. Do it with Hong Kong, make a model which works, hope that the model can apply to Taiwan.

I do not think, even before the recent developments in Hong Kong, that it was taking off. Certainly in Taiwan, I think there is very little support for such an idea. What was a workable approach for at least maintaining relations and developing cooperation was what was called the 1992 Consensus. One of the precisely vague statements was that there is one China but to each its own interpretation.

On that basis, they were able to work together with several KMT governments in Taiwan. But now, Tsai Ing-wen has said: No, the 1992 consensus is not acceptable. It is very going to be very difficult to work out an alternative form of words for cooperation. So you are in for quite a difficult period, especially as the Taiwanese population’s attitudes have been shifting. Two thirds of Taiwanese now think of themselves as Taiwanese and also want to maintain the status quo.

It is a situation where the mainland is looking carefully, wondering what they can do. If they squeeze, it turns the Taiwanese against them. If they relax, the fear that the Taiwanese will have more international space. I think that they are going to constrain Taiwan's international space as much as they can, but I do not think that they will make a unilateral unprovoked move. It is high risk. Even if it works, the victory would be decrepit, because what to do with 20 something million people on an island who are not willing citizens. A unilateral unprovoked move I think is not likely, but a miscalculation or mishap can easily lead you to a place where you do not want to be. Some of you may remember in 2001, there was an EP-3 accident and incident when an (US) EP-3 off the Chinese coast brushed against a Chinese fighter. The Chinese fighter crash and pilot died. The EP-3 had to make an emergency landing in Hainan Island. The US spent several weeks working on an apology to get the aircraft and crew back. I think if something like that happened today, you will be in quite a hard spot. I am not sure I would have similarly benign outcome. It is a very difficult position.

I think the American stance is crucial. Over the last few years, I think America has been taking noticeable steps to engage Taiwan, more visibly including military flights including diplomatic invitations, visits and so on. I think that will be watched carefully on both sides of the straits.

I would say that the official position this administration has taken has been a very careful one. Lloyd Austin was in Singapore recently. He was asked about this and what he said was important, although it was not very much picked up.

I quote what he said¹. He said two things. One, “no one wants to see a unilateral change in the status quo with respect to Taiwan.” That means nobody is supposed to make a unilateral change and please make no mistake about that. The clause is mine, not his.

Secondly, “the US is committed to supporting Taiwan and its capability to defend itself in accordance with the Taiwan Relations Act, and the US’ one China policy.” In other words, the US is taking the position, which it has taken for several administrations. It is a careful statement. It is a statement to both sides that unilateral acts to change the status quo, are not welcome, and what the US will do is carefully spelled out in terms of the limits of where you are prepared to go.

I think if that careful position is clearly and consistently maintained, then we are able to maintain peace and stability across the Taiwan Strait, which is crucial to the whole region, and I think likely crucial to your overall relationship with China too. It is something to worry about, but it is not tomorrow's conflict. It is something over a medium term.

Mr Osnos:  Thank you for that. We will talk about something that may be in fact be short term issue, something that is right in our windscreen at the moment and that of course is the impact of the COVID-19 pandemic.

I want to talk if we can for a moment, picking up on something you mentioned Prime Minister in your opening comments. You pointed out that this period, we have seen this rising sense of insecurities, a rising nativist sentiment in some places. The reason why I linked this to the COVID-19 pandemic is I think there is a feeling that this has been a period in which, in many respects, COVID-19 has begun to cast doubt on some of the globalising impulse that has been so much a part of our world for the last two generations. It has been a big part of Singapore's success. The idea of being integrated with the global economy, about being able to travel, absorb talent from around the world, and so on. You have talked about a new normal these days, and contending with the pandemic and post-pandemic era may take a while to work its way through, but if you would, share with us your thoughts on this subject of globalism, whether we are experiencing a pressure and reaction against it. Do you see this as a temporary phenomenon? Do you see this as something we are going to be contending with for years to come? How do you see this counter global trend evolving in the years ahead?

PM Lee:  I think the pushback preceded COVID-19, but COVID-19 probably accentuated it. The economic logic of globalisation is still valid. In fact, more than ever because if you are going for new technologies and even higher tech, like semiconductors, or aircraft, you are talking about bigger and bigger economies of scale and you need the global market, as well as a global division of labour, manufacturing and talent, in order to make it happen so that you can make something which all of us can use. It is very difficult to have Americans flying American aeroplanes, Chinese flying Chinese aeroplanes and the Russians flying Russian aeroplanes. Not even America or China is big enough to do that.

But there is a pushback. I think there is a pushback firstly because people are looking for more onshoring, they are looking for more economic security. They are scared, they cannot get their masks or gloves or vaccines. There is pushback because of the insecurity felt by the population, so nativist sentiments and therefore governments have to respond to that.

That is not just trade but especially I think movement of people, not just migrants but professionals looking for opportunities, travelling, looking for H1B visas, even they are seen as potentially threats to the domestic population and therefore needing to be regulated. You also have a lot of pushback but pressure against globalisation, which comes from geopolitics, because countries’ relations with each other are such that you no longer can assume that trade is trade, and politics is politics. The two get entangled and therefore when I allow trade, I must decide what the politics will be. That leads not just to less trade but even to bifurcation and many far deeper consequences. There will be impact on globalisation, I think on trade itself, strictly speaking, yes, it will lose some. But it is not an all-or-nothing thing.

On investments, physical investments projects, as well as financial investments listings on stock exchanges, I think the impact will be significant. We have a strange situation now – America does not want Chinese companies to list in America, and China does not want Chinese companies to list in New York, America. It is strange that both sides would think it is bad for them. But that means you are in a lose-lose situation, but it is a reality.

Then you have the impact on movement of people, which I am sure will be significant. It was a very big factor in Brexit. It is not absent from any of our politics, and even in Singapore where we have a significant number of migrant workers as well as foreign professionals, it is a sensitive political issue. We have to put a lot of effort into managing the relations and explaining to Singaporeans why this is necessary, and how the issues can be managed. At the same time, as we explained to the foreign population here, their contributions and their economic efforts are appreciated.

If it is so for Singapore where the arguments are stuck, you can imagine how much more difficult it is in other countries, where it may appear that I can do without the rest of the world and still get along fine for a while – seems so but not so.

Where does that take us? I think it takes us somewhere closer back to where we were after World War II. Trade was not so open but was opening up gradually and you had GATT rounds, and so you gradually co-prospered, but it was a time when movement of people certainly was hardly anything, and capital flows were also hardly globalised, certainly financial markets were not globalised, but there was cooperation and we could work together to some extent. There will be economic losses, because so many opportunities to do things together will be forgone.

But what we worry about, both from the general restriction on the interdependence, and also, if you bifurcate and divide into two, is that we no longer have stakes in one another’s success. I am no longer prospering because of you, because I have investments in your country, and you have successful companies investing in my country. With less stakes into one on one another, I think the chances of becoming rivals (and) opponents or more are greater. It is a less stable situation, but it is the way it is.

The best outcome (is) hopefully we dial back from where we were with the excesses of globalisation. Nobody believes you have one single capital market for the whole world without any borders anymore. Even the IMF acknowledges that sometimes, capital controls are necessary. With safeguards, firewalls, and safety nets, we can still reap most of the benefits of globalisation. I think that would be the Goldilocks scenario, but you could have another situation where you have bifurcation and then countries have to choose. I think that is not a stable situation but it could happen. In the Cold War, it was bifurcated but one side did not matter to the rest of the world and the other side was big enough and was most of the world. The Free World was the economy and the Soviet arc – they had Comecon but it was not a serious proposition.

But here, when all of the countries in Asia and many of the countries in Europe have China as their biggest trading partner, and America as a very major friend and sometimes ally, to have a bifurcation means you have got to split down the middle of many societies, which I think is going to be very hard.

At the same time, you really want to go into new areas of cooperation, you want a digital economy, you are talking about data flows, you need to work on green economy, you need to work on climate change, you need to cooperate with one another on so many global issues. If we are at loggerheads on globalisation, fundamentally, I think all those issues are going to become even more interactable than they already are. That would not just be a pity, it could well be a disaster for the world.

Mr Osnos:  You mentioned a moment ago some of the ways in which there may be opportunities for cooperation. I think it would be encouraging for folks to hear a bit more about what you have in mind in terms of opportunities, where the United States and China, for instance, might be able to still find these areas of common ground. Singapore is the perhaps the world's leading expert at being able to stay friends with multiple sides in a complicated world. How do you think about the way that the US and China might be able to find some areas? What specifically do you think could be a path forward?

PM Lee:  John Kerry has just been in China, he is your climate change Special Envoy. That is a very big issue which cannot be solved without both America and China fully pitching in. Neither side can pitch in, unless both have pitched him, even then, you have quite a busy time persuading Congress. That is one very big issue.

But there are other areas as well, where you need to work together. If we are talking about nuclear non-proliferation, you want to deal with North Korea, you cannot do it without China. If you want to talk about a digital economy, you want to go alone and make your own thing, but it is not really practical to take all of the electronics supply chain, and put it in the US. Possibly if you spend a lot of money, you could get some distance, but it is such a globally diversified operation and China is so deeply engaged in it, that to cut China out of it, (means that) by the time you are unable to buy a DJI drone to monitor forest fires in the US, I think there will be many more hard choices you are going to make, if you take bifurcation to its extreme limits. It does not make sense.

On the Chinese side as well, it does not make sense for them because they know, and they must know that however great, extensive and diverse their country is, they are no longer and they are not the whole world. There are others, there is technology elsewhere, there are resources elsewhere, there are capabilities elsewhere. You have to work together in order to make progress.

Mr Osnos:  Something you mentioned a moment ago in your opening remarks was about the consistency of American policy. This is something that you mentioned a couple of times and I wonder if you would give our audience a bit of a temperature check around the globe. The last four (to) five years in American politics have been turbulent to say the least, and I wonder if you can give us some candid talk for a moment about whether American partners and competitors around the world are looking at us and saying, okay, we think that was a confined period they may seem to be back on a more stable footing now. How does our politics look around the world today, Prime Minister? What do you think the impact is on American strength and America's position in the world?

PM Lee:  I think many countries are watching America anxiously. We understand the social strains, which beset different states, blue states, red states, blue collar, white collar. Somebody wrote a piece recently on how there are four different Americas.

Mr Osnos:  Yes, George Packer’s piece.

PM Lee:  These are real strains in the society, which the politics will reflect and have to reflect. But at the same time, we have long term interests, which really, if you analyse it, do not go for or against one side or the other. America wants to maintain its place in the world, I think whether you are blue or red, that is something which you would like to have. You would want America to stand tall in the world, you would want America to be at peace with their neighbours and with others, you want to be able to make a commitment and to have that commitment stick. When the president says something, you must have some confidence that it is something which can be followed through and not something which can be overturned by a new executive order. So, that is something which we would very much like to see. I mean the policies, these are important; the implementation, that shows that you are actually doing it. But to make it stick, you really need a broader consensus that this is the direction the country is going. On foreign policy, of all things, I think it is easier to reach a consensus than it is on healthcare. Should be, has been, for many years it was so, and politics stopped at the shoreline. When it came to foreign policy and security matters, there is bipartisan consensus. If you could maintain that, that would be good. There is bipartisan consensus today on one thing, which is relations with China, but there the stance is to take a hard line. I am not sure that is the right consensus, but that is the way the mood is today and maybe it will shift. We hope it can shift in a considered and thoughtful way.

Mr Osnos:  One question before we before we turn to the Q&A is about trade. I know there are a lot of people who are going to be very interested in the question of, as you have said, the US is not likely, not in the cards, to join the CPTPP, but I wonder if you would just speak for a moment about what you think the impact of the US staying out will be? What impact does this have on China's position in the region, and how do you think we should anticipate the effects in the United States?

PM Lee:  It is water under the bridge. President Obama put a lot of effort into negotiating the TPP deal, but at the end, he could not get it across the line and so he did not join. The other countries carried on and made it the CPTPP, but basically the same deal. On your side, what happened is that elements of the deal were taken up by the Trump administration and used in their new NAFTA arrangement, the USMCA. In fact, some pieces of that were originally negotiated in the CPTPP. You are not in it now, and I think it is a loss to the United States. Because when you are engaging the Asia Pacific, it is not just the Seventh Fleet or USINDOPACOM, you also have investments, you also have trade, you also have interest, you have people there, and you have got very deep transpacific interactions, which are mutually beneficial. It is only sustainable for you to be leaning forward with security forces and military forces, if at the same time you are able to say, and countries are able to say, “well, this is not just military, but they are deep economic interests where both sides are advancing. There is a shared objective and therefore, it is something worth working together on.” You do not go around like other countries may do, distributing little bits of confetti as foreign aid, and then that counts as the reason why countries will adhere to you. You are looking at one significant move, which is substantial and is worth doing, and the TPP was meant to be that substantial move. They decided not to opt in – well, we accept that.

If you ask me in terms of economic dollars and cents, it is a few percentage points on the GDP maybe or maybe not, maybe even a little bit less than that, but in terms of the symbolic importance of you deciding not to commit, I think that leaves a deep impression. Because at the same time as we are talking about trans-pacific cooperation, we are also talking about cooperation within Asia and amongst the Asian countries. We have a free trade agreement called the Regional Comprehensive Economic Partnership (RCEP) and that includes China, India, Southeast Asia, Northeast Asia and Australasia. It is broader, not so deep as the TPP would have been, but it has substantial scope and it is the right architecture for Asia, except that at the last minute, the Indians said that, “I am not ready to join yet.” So, we have regional cooperation progressing, fits and starts but it is progressing, and to make the most sense trans-pacific cooperation needs to progress also.

We hope that it is possible one day for America to come back, when constellations come back in alignment, and you can join the TPP. That may be a while, but meanwhile, the digital economy is growing and the green economy is important. We should be able to talk about digital economy agreements, we should be able to talk about green economy cooperation and standards for climate change cooperation. These are areas where you can talk about substantive items, which are beneficial to both sides, and we hope politically more doable in the immediate future.

Mr Osnos: Prime Minister, I have one more question. I think it is essential for us to talk just briefly about the current state of affairs on the COVID pandemic. Here in the United States of course we are contending with a spike in cases as a result of the Delta variant. You have been dealing with some of that in Singapore yourself. For people who do not know, Singapore has been applauded over the course of the last 18 months for its handling of the pandemic. I think you were ranked number one and two in the Bloomberg Resilience Score. We are struggling here, we are trying to get our arms around it and make sure that the progress that has been achieved so far can be sustained through the rest of the challenges ahead, but I wonder if you would tell us about your sense of the risks posed by the Delta variant to the progress that has been achieved so far? What are you preparing to do in Singapore? Do you expect that we will be heading back into the kind of lockdowns that we have had before, or do you think we will be able to manage with a smaller degree of intervention?

PM Lee: First of all, we take all these rankings about who is doing better and worse on COVID with a big pinch of salt, because every time you think you are doing better, something can happen. It has happened to all the countries, it has happened to us from time to time, and we learn to have a very healthy respect for this enemy we are dealing with. The Delta variant has been a very unwelcomed new surprise in a whole series of surprises. We first got it probably in April, and we have had several outbreaks since then, a few hundred each time, this time 1000 plus, 2000. It is extremely contagious, it is very difficult to tamp down, and the only solution which we can have will be vaccination. Vaccinate nearly everybody, vaccinate as quickly as you can. That is what we are doing, we are making progress, but looking at the transmissivity and the experience of other countries, it looks like you have to vaccinate a huge proportion of the population in order to get herd immunity – if that is at all possible. I mean, you look at Provincetown where they are all vaccinated, they had one party on 4 July, and suddenly you have got an outbreak all over America. So, we are under no illusions about the challenge of COVID-19. We are almost at 70 per cent to those vaccinations, we should be there within a week or so, but I do not think 70 per cent is the endpoint, we are trying to push it higher than that. As we get there, we plan gradually to ease up on the safe management measures that we have. We think that a big bang is taking more risks than is necessary, but we will move incrementally, and we will see how the disease spreads. It will not go to zero, it will be in the community, question is will it be at a bearable level, and in particular, will a minority of people, old people who are vulnerable, be sufficiently protected?

If that can be done, then we can take further cautious steps forward. But we are treating this as a public health thing and a public morale thing, explaining to people why the twists and turns happen to us, and we have to be as supple as the virus. But it is tough, and people do get tired.

Q (Niamh King): We have several questions in the chat box about your thoughts on a digital currency for Singapore. Could you let us know any thoughts on that, please?

PM Lee: We have got various electronic mechanisms for payment, so people can do without cheques and without cash, which have been quite successful. We have not done a central bank digital currency yet. We are studying it, but we have not made any decision. I do not think it is something which is a top priority for us. We are trying to go cashless and paperless, but we do not see us going 100 per cent of the way.

Q (Joseph Nye): Thank you very much. Prime Minister, we spoke a little bit earlier about the problem of Xinjiang and human rights, and obviously you do not want to see a breaking of relations over Xinjiang. On the other hand, if you look at the question of should we go to the Olympics, as though everything is normal, and should companies treat the Olympics as the celebration of Chinese soft power, some of them are suggesting that we should downgrade the level of government representation for the Olympics over Xinjiang, and in addition to that, companies ought to moderate the praise of China, that would go into the usual Olympic hullabaloo. Just curious, this recommendation incidentally is in the new report – the US European report on relations with China. I was wondering what your reaction is to that recommendation.

PM Lee: I think it is a very delicate matter for China. They have a very challenging situation to deal with in Xinjiang because it is one of those situations where you are not sure whether which way to go. If you take it very stringently and tightly, that may result in a pushback. If you ease up too much, that may result in situation bursting forth elsewhere. And from an external point of view, if you take a view that you want to express moral approval or disapproval, then you have to try and make a calculation whether that will make a difference to your objective, and will that make things better or worse in China?

It is always delicate for a country to be publicly expressed disapproval of and to accept that and say yes, I will learn and do better. I think no country in the world does that. So the question is how you are able to continue to operate with them and yet at the same time, you have your views, they have their views, and without compromising your position, you maintain your dignity but you do the business, which is necessary. You have had to do that in many countries on many occasions; your diplomats understand this problem.

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