Davos 2012: Lee Hsien Loong - The Outlook for East Asia

Of superpowers and the small boat Singapore

TODAY, 7 Feb 2012

IN AN interview on CNN's 'Fareed Zakaria GPS', Prime Minister Lee Hsien Loong talks about US overtures in Asia, China's economic growth and military profile, and how Singapore addresses inequality. Here are excerpts from the interview:

ON CHINA'S ROUGH LANDING

MR FAREED ZAKARIA: One of the great concerns people have, looking out this year, is that the Chinese economy is going to slow down ... that in order to get out of the financial crisis, the government overspent, over-lent, and that these excesses are now going to begin some kind of a tough landing, if not a hard landing. What do you think?

MR LEE HSIEN LOONG: I am an optimist on this, fundamentally. I can't say that there will be no bumps in the short term. But I think in the long term, the trend will be up. They've built a lot of infrastructure. They have built a lot of capacity in many industries, autos, some of the electronics industries. But it's an economy which is growing very rapidly, urbanising very rapidly, needing a lot of facilities, whether it's roads, hospitals, schools, houses, by the millions. And every year, 1 per cent of the population is moving into cities, which means 13 million people needing all this infrastructure.

So I think that there may be a rough landing, but they will get through it.

ON US, CHINA AND REGIONAL SECURITY

The United States went through a flurry of diplomatic activity over the last three months - the East Asian Summit, ASEAN, the proposal for the Trans-Pacific Partnership and a kind of military cooperation arrangement that could be described as a military base in Australia. Now the Philippines is talking about perhaps having American troops back. Do you think these moves are stabilising the Asia-Pacific region?

We fundamentally think it's good that America is interested in Asia and in the Asia-Pacific region and that their presence since the Second World War has been a tremendous benign influence. It's generated peace, stability, predictability and enabled all the countries to prosper, including China.

And I think it's good that America continues to take a close interest in the region, not just on security issues, but also economic issues and cultural and on a broad range of areas.

But it cannot be for a few months at a time in a spasmodic style. It has to be sustained over a long period of time, really, over many administrations and decades. And America has got many preoccupations around the world, so we hope, on your busy plate, Asia doesn't fall off the edge ...

But we are naturally very happy that President Obama and Hillary Clinton have made the effort and have put Asia quite high on their agenda. We hope it will be sustained.

The Chinese reaction to this flurry of diplomacy and these new agreements has been somewhat cautious, in some cases, hostile.

The official position is that they are very happy to have more members join the East Asia Summit. And America is welcome to join, Russia is welcome to join, Europe is welcome to join, the more the merrier ...

Their private position probably is a wariness. They are watching. They think that there will be people in America who are not quite happy that China is prospering and would like to hinder that process. And they will not want to let those people succeed.

So I think that there is cooperation, but there's also watchfulness on both sides.

Do you think China will be trusted as the dominant power in Asia? If you look at the last year, where China made these pushes in the South China Sea ... it seemed like it provoked a very strong backlash in Asia.

Well, every superpower or big country has to be looked on with a certain careful respect by others not quite so huge. Even the United States. But the US, after 70, 60-plus years in the Pacific, since the war, is still welcomed and is still considered benign. And that's really a good example for the Chinese to seek to emulate.

ON HIS WORRY FOR SINGAPORE

What keeps you up at night?

I think Asia will boom. There will be ups and downs. We will be affected by Europe if Europe goes bump in the night. But if it doesn't, well, there's a certain momentum ... in China, in India, in South-east Asia which will help to carry us forward.

What worries us in Singapore is not that the world will not prosper, but (whether) in the ups and downs of the world, a small boat like Singapore, with not very much room to maneuvre, can you make sure that every time you catch a wave head-on you are not flipped over? Because once you are flipped over, that's it.

ON MINISTERIAL PAY CUTS AND SOCIAL INEQUALITY

The World Economic Forum has this list of global risks. And I was struck by the fact that the number one risk on its list is rising inequality ... I was wondering if you would reflect on what it means and what you can do about it, because you, yourself, have had to deal with this in Singapore, where you have had to cut the salaries (of ministers) including your own. Why did you do it?

It became an issue during the elections. The reasons for needing to pay people well, or pay people properly, are well established, because you must pay commensurate with the responsibility of their job and commensurate with the quality of the person you are looking for to do that job.

And the job is vital because you make a wrong decision, it's billions of dollars. And you put the wrong man in, that's a disaster. And anybody who comes in ... must think what are the financial implications, not just for him but for his spouse and children.

But when you are talking about salaries which are S$1 million or S$2 million, to the man in the street earning a few thousand dollars a month, it's an incomprehensible sum. I mean it's defensible, but he cannot wrap his mind around it.

So it became an issue in the elections. And after the elections, I appointed a committee to review it and look at it dispassionately. And they decided that the principles were sound. You have to pay competitively, but they recommended a different benchmark and a different number and we've accepted that. I don't think that it will be the last word on the matter, but it's a very difficult issue because it is important to get the right quality of people into government.

What do you do about inequality in Singapore? Your top people are world class. They make millions and millions of dollars. At the bottom, your workers are facing pressures from India, China, Bangladesh.

It is a problem, like it is in India and China, like it is in every other country. First of all, we make sure that everybody gets very good education. So no matter which school you go to, you get a first-class education. And if you are bright and able, you have every chance of rising all the way to the top, never mind what your background is.

Secondly, through our public housing program, through our other public subsidies, particularly on health care and education, we make sure that everybody starts with some chips in life. You don't start with zero. So if you are poor in Singapore, that's no fun. But I think you are less badly off than if you were poor nearly anywhere else in the world, including in the US.

Thirdly, we have to encourage people to try their best to not be satisfied with where they are, but to upgrade themselves, not just in school but all their lives.

ON HIS FAMILY

You are the son of a prime minister and founder of your nation. What is it like to follow in his footsteps? I realise it was not an immediate secession, but still, what is it like to have that legacy or shadow?

Well, I don't know. I've never not had it. It's tough enough, but you get to live with it.

I've had the honour of meeting your father many, many times ... He would strike me as an extraordinary leader. He'd be a tough dad. Was he a strict disciplinarian?

He had expectations. But he left me to do my own thing and he didn't push me into this. And neither would it have worked had he done so. I had to make up my mind whether I wanted to go this way or not. My siblings didn't decide to go this way, I did.

Do you think your children are likely to go into politics?

They will have to decide, but if you ask me now, I think the odds are not on it. It's a different generation. It's a new world. There are so many opportunities, opportunities in Singapore, opportunities abroad. For the talented, the whole world is their oyster.

If you are in an Ivy League university in your first year, you are already talent-spotted. In your first vacation, you are already offered internships. After your internship, you are offered, more or less ... 'When you graduate, please call this telephone number'. And if you are working in Wall Street or in Silicon Valley or one of the startups, you feel like you are the cat's whiskers because ice cream any time of the day is the least of the perks. They need talent. They treat talent well.

And Singaporeans, having been well-educated and completely comfortable in this world, are going in significant numbers in these directions. We have many students studying in America in the best institutions. We have many students in Oxbridge, some on the continent. And I am sure many of them will be tempted by these opportunities.

And it is a great challenge for Singapore to make sure that enough decide that despite this, we will be in Singapore and we will make the system work.

With your children, do you still maintain the high expectations?

They have to find their own path in life.