Saturday 28 October 2017

PM Lee Hsien Loong's Dialogue at the Council on Foreign Relations, 25 October 2017

US must stay engaged in Asia, seek understanding with China
Prime Minister Lee Hsien Loong shared his views on China, North Korea and United States engagement in Asia during a dialogue at the US Council on Foreign Relations earlier this week. The session was moderated by New Yorker staff writer Evan Osnos. This is an edited transcript.
The Straits Times, 28 Oct 2017

OSNOS: You have met over the course of the past few days with President Donald Trump and members of the National Security team. You have been on Capitol Hill (where Congress is). What have you gained from your interactions so far when it comes to the key message about the importance of the US in the region?

PM LEE: I take comfort from the fact that nobody is talking about disengaging. They are talking about engaging in a different way; there is a feeling in the administration somehow that America has not quite got as long an end of the stick as it ought to, and they would like to rebalance.

But I am reassured that they know that America's fate depends on what happens in the rest of the world. You have been the most open market in the world, and now the Americans are saying why should that be so - the others should be as open as us. I can tolerate the Japanese, I could accept the Europeans, but now the Chinese are a different order of magnitude - they ought to be like us. And I think it is reasonable to push for that but if you want that to happen overnight it may well come to grief.

OSNOS: You were last here in August last year. Quite a bit of it has changed since then. Do you sense that there is a fundamental change in America's approach to Asia?

PM LEE: Well, it is a result of an election process, those were your rules, this is your outcome - and the fact that you now have this outcome has created a new fact. In politics, no party stays in power forever; at some point another party will come in and another mood will take over in the country and you will have a president who will pursue a different approach. But this would have become part of the discourse, part of the expectations, and I think it will be very, very difficult to go back to where you were on Nov 1 last year.

OSNOS: Your late father, Lee Kuan Yew, used to talk about the balance of power. China is your greatest trading partner, but the United States is your greatest security partner. Is that balance of power becoming more difficult now?

PM LEE: It depends on how you work out your relationship with the Chinese. You need them to deal with a lot of issues. They have become stronger. They have become bigger. It means that you need their cooperation more, not just on bilateral issues, but on strategic things. To do climate change you must have them, otherwise no deal is reachable. To do nuclear non-proliferation, you must have them on board. To deal with North Korea, you must have them on board. So if you are able to work with them on a stable, gradually evolving relationship which gives them the space to grow their influence, but in a benign way, then we are fine. We remain friends with both. If you have a tense relationship, and one or both of the parties say, "You're either with me, or you're against me", then we're in a difficult spot. It could happen.

OSNOS: The Chinese talk about the Belt and Road Initiative which (President) Xi Jinping has overseen as a new basis for stability and security in the region. How does it feel to you in the region?

PM LEE: Our view in Singapore, which is shared by many in the region, is that it is a positive thing. The Chinese are going to grow their influence. It is going to happen. How is it going to fit in? And this is one coherent framework within which the Asian countries - Central Asian, South-east Asian, South Asian - can participate in. It means infrastructure, it means financing, it means connectivity, it also means influence and if you ask any of the countries in the region, they will say, "Yes, I want to participate. I want to trade. I want to do the business. I would like them to invest."

There are political sensitivities, but subject to that, there is a lot of business which needs to be done. At the same time, the region has prospered not by doing business only with China, but also by doing business with America, with Europe and the rest of the world and I do not think any of the countries in the region would like to give that up, so provided the Belt and Road Initiative happens in such a way that all these external links stay open and the region remains an open region, I think it is a good thing.

OSNOS: Does the Belt and Road Initiative pose a challenge to the United States?

PM LEE: Well, it is not whether Belt and Road poses a challenge to the United States - the question is how are you going to respond to a China which has got a gross domestic product which will, within the next decade, or two at most, be as big as yours, world trade which is considerable, financial resources which are considerable. You cannot say I will deal with them on the basis that they will have an armed force the size of a middling European country and a global influence the size of - I think it will be invidious to name anybody - but you know what I mean. It cannot be. They are going to be a power. They want to be a big power. Question is, how can that happen constructively and benignly. I think Belt and Road is a constructive way to do it.

OSNOS: Singapore will be the chairman of ASEAN beginning next year. When you look at South-east Asia today, are two camps in effect forming? One camp, whether it is the Philippines and Malaysia, that is creating greater, stronger relationships with China, and another camp.

PM LEE: I think ASEAN works on the basis of consensus. It is not the 50 states of the United States of America, neither is it the 20-odd states of the European Union. These are 10 sovereign countries which have come together in an association. Where there is an alignment of interests, and a consensus, of views, then there is an ASEAN position; where there is not, then we agree to disagree and we will discuss the matter again one day.

On strategic issues there is no single strategic perspective. The threat assessments, the fundamental interests, the due political positions of the countries are very different. And on some issues, the lowest common denominator is basic, but still worth having.

OSNOS: This week is a big week in Beijing. A lot of people here would be curious for your assessment on what it means to have the 19th Party Congress introduce the new generation of leaders. Xi Jinping is now enshrined in office, and has opened the next chapter of his leadership.

PM LEE: I do not think he was enshrined in office, only his words. Xi Jinping has consolidated his position. He has got a new line-up in the core leadership of the Politburo, the standing committee, also in the central military commission. He has got his "Xi Jinping's thought" inscribed in the Constitution. His own leadership position is pre-eminent. At the same time, I think there is a purpose to this which is to signal that this is the start of a new phase for China.

They said a new era. That means Mao's era, Deng's era and now Xi's era and an era which he envisages extending not just for the next five years or even 10 years of two terms, but extending to 2050 and taking China to 100 years after the revolution. If you look for difference in emphasis, it is what the Chinese themselves say that with Mao Zedong, China stood up; with Deng Xiaoping, they got wealthy; and now with Xi, to get strong. What does strong mean? That is what everybody will be watching carefully.

OSNOS: What do you think it means?

PM LEE: He has set it out in his 14 points in his opening long speech, and none of them are completely new, starting with the fact that the party must be fully in charge and it includes economic growth, environmental considerations, welfare and the lives of people, strength internationally, and including strong armed forces. So all the ingredients are there which any normal great power would have to pay attention to. What you do not know is the balance, the tone, and the wisdom with which these elements will unfold and we will have to wait and see.

With the generation which has grown up through the Cultural Revolution, they have known hardship and turmoil. They greatly treasure peace and stability. With the next generation, which has grown up during the period of reform and opening up, that means since 1980-ish, and have only seen continuing progress, will they be a generation which you might say well - it is from warriors to engineers to poets and artists, or will it be that having not known the turbulence, they will feel that now that I am strong, let me show the world what I can do. And I think that is a big question. If you ask the present generation, they will swear to you that the next generation will make their calculations and know that peace is important. I hope so.

OSNOS: Singapore is one of the largest foreign investors in China. So you are in an especially good position to help us try and gauge the health of the Chinese economy; their strength, their weakness. How do you assess that?

PM LEE: I think there is a lot of energy and vibrancy. You have to look at it qualitatively, the sort of companies which are generating the sort of innovation which is fermenting in Beijing, in Zhong Guan Cun near the university, in Shenzhen where people come from all over China and start up companies, the mood is not very different from Silicon Valley, and the quality of the people and in fact, the quality of the companies which have been generating technology, they are equal to any in the world. They may not have as many companies which are like Google or Facebook, but if you look at Tencent or Alibaba or Huawei, they are not just copying others' technology. So I think the talent is there, the energy is there. There are structural issues which have to be dealt with - the SOEs (state-owned enterprises), the taxes, the household registration system, what do we do with it; the agricultural sector, how do you manage the exchange rate, the banks and your loans and debts. But these things take time to handle.

On the one hand, having talked to their professionals in economic management, we know that they have very competent people who understand all these issues. The question is whether you have got the right combination at the political-economic level. That means in the Politburo or among the top leaders who put this quite high up in their agenda and can make the political decisions and trade-offs in order to stage and to manage very delicate transformations which economically are critical but politically are very hard to do.

OSNOS: There has been a lot of hope that perhaps as Xi enters his second term of office, they may begin to undertake more of this kind of structural reforms?

PM LEE: I think that he wants to do many things and he will balance these off against his social objectives, political objectives. He has got other strategic preoccupations. If you look at his speeches at the Congress and also when he announced his list, economics is there but it is not the first big item.

OSNOS: On North Korea, this is the crisis of the moment in the region. How serious do you think the risk of military confrontation is and what do you think the US should be doing to avoid it?

PM LEE: You will always have the risk of a miscalculation. This administration has made some very strong statements but at the same time you have made clear that you do not want to go to war. The North Koreans are not suicidal. They are past masters at thunder and alarums and not without success. If you are lucky, that is how you can get past this hard point. If you are not, you could have a miscalculation. I think so far, you have not had a miscalculation. We hope that will continue so.

The difference this time is they now have more nuclear weapons and more powerful missiles, intercontinental ballistic missiles. So that raises the stakes but it does not yet qualitatively and suddenly change the picture. Because you have never been able to say you were completely without risk, before the latest missile tests. So it is up to the US how you want to respond, and what pressure you want to apply on them. You have to apply pressure, you also have to talk. You cannot not talk because if you do not talk, you cannot get anywhere. If you only talk, then nothing will happen. You will just be strung out. You have gone through this so many times before. But to play this game, you need to work with the Chinese, and the Russians must be somewhere in the picture. Most of all, you must have the South Koreans and the Japanese on your side. And if they are not on your side, you will have a hard spot. But even if you want to do something decisive, if the South Koreans are not with you, you cannot do that. So you have to have that diplomacy as well as that realpolitik.


Presidents Trump and Xi will be meeting soon. What are your near-term expectations for that important US-China bilateral relationship?

PM LEE: I think what we hope we will be able to do is not to solve problems overnight but to begin to establish a shared frame of reference - a mutual understanding, how does he think, how do I think, where are the areas where we can work together. And then over time we can work things out. I think if you try to work deals immediately, you can get them and I am quite sure that the Chinese side, they will have some ready and have worked some out. But I am not sure if you make quick deals with them that you will, first, have a fundamental breakthrough and second, that you have the basis for a long-term sound relationship.

You must have a clear understanding, they must have a clear understanding where you stand, and you must know, have some idea of what engagement you have with them. I mean, you will not be able to get his bottom card, but you must have some idea whether you can talk to him, whether you have a line to him, whether this is somebody you can do business with or not. I think this is important. So, when Xi Jinping went to Mar-a-Lago, there were all kinds of naysayers of how unwise it was of Trump to do this and so on. But I thought no harm could come from it because you cannot come to a sudden deal and it is good that the two presidents get to talk together and understand one another. And I think it turned out well. It does not mean you make a breakthrough but it was the basis on which thereafter they can talk about many issues. And I understand they ring up each other quite frequently, and there is a line - you need that line.

One of the things which Henry Kissinger regularly laments is that the Chinese have a strategic view and the American presidents do not. And to some extent he is right but there is an exculpation which is that an American president cannot commit his successor. So, short of committing your successor at the beginning of the term, you have the chance to set the tone and to establish an understanding, what are you trying to do and then let us work together. The Chinese tell us explicitly that they are looking at the new administration, that this is an administration which they say is is looking to deal with items one by one, and they are not quite sure how to figure you out and they are looking for a way to understand you. So, if you find them inscrutable, you must realise that Westerners can be inscrutable too.

OSNOS: Earlier you said that in politics, no party remains in power forever. Does that apply to Singapore?

PM LEE: I am sure it does. I do not know when it will happen but I will not make it happen sooner than it needs to.

OSNOS: You have said before that you may not stay in office after the age of 70. Do you have thoughts about the next Prime Minister?

PM LEE: My aim is not to be Prime Minister beyond 70. I am trying very hard, I have got a team in Cabinet; I have got strong people in the team, and among themselves, they have to take a little bit of time to sort out who should be the next leader.

President Donald Trump welcomes PM Lee Hsien Loong to the White House on 23 October 2017
PM Lee Hsien Loong's Speech and Dialogue at the Council on Foreign Relations on 25 October 2017
Speech by PM Lee Hsien Loong at the Economic Club of Washington DC on 23 October 2017
PM Lee Hsien Loong interview with Mr David Rubenstein, President of the Economic Club of Washington DC, on 23 October 2017
PM Lee Hsien Loong's interview with CNBC, 19 October 2017

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