Feb 17, 2014 05:12 PM

Lee Hsien Loong: The Politics of Doing Business

(Singapore) – Singapore plays the role of balancing power in Southeast Asia, where China and the United States compete for influence. Its diplomatic relationship with Beijing is mature, but it is also an important ally of Washington. 

Meanwhile, as one of the four countries that initiated the Trans-Pacific Partnership (TPP), Singapore is an active promoter of free trade and integration of the Asia-Pacific region. The TPP has 12 members, including Singapore, New Zealand, the United States, Australia and Japan. These countries are responsible for 40 percent of global economic value and one-third of trade value.  

How does Singapore view the agreement's impact on trade and economic patterns in the Asian-Pacific region? In an exclusive interview with Caixin, Prime Minister Lee Hsien Loong said the TPP is a significant step toward the ideal of making the Asia-Pacific Economic Cooperation grouping a free-trade region.

But negotiating deadlines have been missed due to the diversity of the countries involved and political complications. Lee is hopeful talks can be completed this year. He said taking any longer "would be a setback."

Lee also said China should look at the TPP just as it did with the talks to join the World Trade Organization – that is from an economic point of view. But, of course, politics will always play a role in such decisions.

"Trade is never purely trade," Lee said. "Trade is also an expression of who are your friends, who are your allies."

The following, the second in a two-part series, are excerpts from the interview Lee granted Caixin.

Caixin: In your opinion, what are the most formidable challenges China faces domestically and internationally?

Lee Hsien Loong: Domestically, to continue to restructure your economy so that you will not build up social tensions and you can continue to fulfill your full potential. Because of your full potential, I think you can grow 7 to 8 percent for another 15 to 20 years quite easily. The energy is there, the determination is there, the people are talented and they are hungry. But to be able to get the systems working, the reforms through vested interests overcome, the administration to be efficient, transparent and honest, and the social stresses to be relieved so that people don't see "fu er dai" and "guan er dai" (the children of the wealthy or officials) and all these other problems which are unavoidable in a rapidly changing society. I think that is something that will keep your leaders very busy for a long time.

Internationally, I think China is becoming much stronger. I think it is becoming much more active in engaging its partners, in pursuing its interests, and defending its interests. And one of the major challenges for China is how to do this in a way where you are defending your interests but at the same time you can integrate smoothly and peacefully into an international order, because China will not be the most powerful country in the world. You will probably be the biggest economy in the world within a decade or two, depending on how you measure.

But there are other very major and powerful advanced economies, and China has to work with them and there has to be give and take on both sides. Even with small countries, there has to be give and take, a sense that in international relations the principles of co-existence are used, "pingdeng huhui," or equal and mutual benefit. So that is a very difficult balance to strike because you will have a natural sense of pride. You have "fuxing zhilu" (the road to restoration), the idea that after 168 years China is on the verge of arriving and wants to take its place in the sun. But at the same time you want to fit in peacefully and be looked at by other countries with admiration and respect and not just with other people saying: "Oh he's powerful, I have to pay attention to him." That's a very difficult challenge to balance.

What do you think about the rebalancing policy of the United States? Is it a show of strength? Or is it an adjustment the United States has had to make because of its relative decline of power in this region?

I'm not sure why you would say relative decline.

Relative decline, it's weaker.

America has been in Asia since the Second World War. Even before that they were in the Philippines because it was a colonial master. And their presence has been welcomed by countries around the region all these decades, and I think that the Americans understand they have an important status in the region, they have friends, they have interests. They have security interests, and it is important for them to be present in this region and to exert their benign constructive influence.

At the same time, it has to develop a stable relationship with China which is based on more trust and more mutual cooperation. So I would look at it like that. If it's a relative decline, well, it used to be that every aircraft carrier in the region was American, now not quite so. But I think the Americans are formidable not just because of their military forces or security presence, but also because of their economic ties, also because of their soft power, because people enjoy watching Hollywood movies, enjoy listening to American pop stars. Even in China, so many of your top people, whether it's in business or government, send their children to study in U.S. universities.

What is Singapore's understanding and expectations for the 'new type' relationships between major countries?

I don't know. That's a term the Chinese leadership have come up with, and they've talked about it with Mr. Obama in Sunnyvale in California. I think from our point of view what we hope it will mean is that the two countries will have a constructive relationship.

There will be competition. There will be issues which will arise from time to time. It cannot be that one side just gives way to the other, and therefore we are friends. There has to be a balance and a give and take, and a mutual understanding of where vital interests are. And then the ability to work together to deal with issues around the world which concern us all, whether it's global warming, whether it's nuclear proliferation, whether it's security in the Middle East, Iran. China has a stake in all these issues.

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