PM Lee Hsien Loong on "Asia-Pacific Dream", Singapore's role

Singapore's Prime Minister Lee Hsien Loong (left) shakes hands with China's President Xi Jinping during a welcoming ceremony for the Asia-Pacific Economic Cooperation (APEC) summit, inside the International Convention Center at Yanqi Lake in Beijing
Singapore's Prime Minister Lee Hsien Loong (left) shakes hands with China's President Xi Jinping during a welcoming ceremony for the Asia-Pacific Economic Cooperation (APEC) summit, inside the International Convention Center at Yanqi Lake in Beijing on Nov 11, 2014. Prime Minister Lee Hsien Loong was interviewed by Singapore media at the end of the Apec Summit in Beijing on Tuesday.  -- PHOTO: REUTERS

Prime Minister Lee Hsien Loong was interviewed by Singapore media at the end of the Apec Summit in Beijing on Tuesday. Here is the transcript of the Q&A:

Q: What are your overall impressions of the Apec Summit, especially of China's hosting of the event?

PM: I think they pulled out all the stops to make it a success, both in terms of substance, to prepare significant initiatives which we could discuss and decide on, and also in terms of arrangements for the meeting. Whether the conference venue, the dinner, the show and entertainment. They set out to impress and they succeeded.

In terms of the substance, it was a good agenda. We talked about the FTAAP (Free Trade Area of the Asia-Pacific). And we've agreed to launch a study on the issues related to it, which is a very significant move forward. We've talked about the  connectivity blueprint, which is linked to the infrastructure issues, the transportation issues. And the Chinese have just recently got agreement to start the AIIB (Asian Infrastructure Investment Bank). That's another significant initiative. And we talked about other outward looking things, the WTO (World Trade Organisation), the Doha round which is stuck, and also how Apec can make a contribution in the wider world, on issues like Ebola.

So I think that it was a good meeting where there was a substantive agenda and we've made significant progress.

Q: China has been very active in pushing these initiatives. Do you think that in doing so, China's standing in the region has increased?

PM: I think the Chinese naturally see this as beneficial to themselves, otherwise they would not consider it. But it's also beneficial to other countries too, otherwise it would not be resonant, it would not be picked up and we would not be able to move ahead.

The FTAAP is not a Chinese idea. This is an idea which was there at the beginning. It was the reason why we created Apec back in 1989. But it was a long term ideal. you cannot get there in one jump. As the Chinese say, you can't yi cu er jiu (reach the goal in one step). It's just not possible. You have to take it step-wise. And  we've now spent 25 years with various liberalisation within the Apec framework. The Asean trade liberalisation, which in 1989 had not even begun. We've got the TPP (Trans-Pacific Partnership) being negotiated, hopefully close to beng done. So I think the time is right for us to take it another step forward. And I think the Chinese have done us a favour by making this move. 

Q: Is Shanghai going to become the next financial centre? How will that affect Singapore's role?

PM: I think Shanghai will be a financial centre because the Chinese are a major economy and they already have very significant domestic financial requirements and some of these will be met onshore and they will try and build up Shanghai. For instance, the stock exchange in Shanghai is a big one. But Hong Kong also has a major role. Singapore also plays a supporting role as far as the Chinese market is concerned but (is not) as dominant as Hong Kong by far.

But I think there is a difference between Hong Kong and Shanghai still and this is not just where the financial institutions happen to be. It's also the whole ecology. You have the framework of the rule of law. You have the professionals there, you have a precedence of how things are done, the networks. And people are comfortable with that. For Shanghai to build that up, it takes some time. I think the rule of law is one very important ingredient. The Chinese are talking about it - they are talking about yi fa zhi guo (rule by law), and you have to have that confidence in order to get people, not that confidence but the system and acknowledgement by both the financial institutions and their customers that if there is an issue and they go to court, they will be adjudicated and they will accept the judgment of the court.  Then, the industry can grow.

You look at Shenzhen for example. The Chinese has an economic zone within Qianhai. It is very interesting because Shenzhen itself was a Special Economic Zone and now you have a piece of Shenzhen carved out , which is carved out in order to encourage Hong Kong institutions first to go from Hong Kong and set up in China in Qianhai with rules which approximate those in Shenzhen. And what are the rules? Well, the anti-corruption agency is meant to be independent.  And the courts are meant to be autonomous and do not appeal up to the Chinese courts system. So in other words, the Chinese understand that these are prerequisites which have to be put in place in order to gradually grow a robust, cosmopolitan international financial system. But it takes time. The banks have all gone into Qianhai but for it to become like Hong Kong, I think it is quite some distance to go. So Shanghai, well they have a bigger scale. They are doing an experiment with the Shanghai Free-Trade Zone and that's about a year now. And I think they will make further changes along the way but I think it will be some time before Shanghai is treated the same as Hong Kong is today.

Q: You spoke with President Xi about the situation in Hong Kong?

PM: Only very briefly because we were talking about other issues too but he had mentioned he has noted what I've said about Hong Kong and I gave him my views on why I think it was good for Singapore if Hong Kong prosper and Singapore prospers with it and we don't see any rivalry the way sometimes when you read some of the international newspapers' write-up as if we are at each other's throat, which is not so.

Q: President Xi spoke about an "Asia-Pacific Dream" where the rise of China creates infinite opportunities for all. There's some big power rivalry at play at the Apec. What are the ramifications for Singapore?

PM: Well, China is growing and they will continue to grow with difficulties and ups and downs. But as long as they make progress on the reforms and I think they're absolutely serious about working at them, then I think their reforms will enable them to grow rapidly for quite a long time to come. And therefore it's going to be a major factor in the landscape in Asia, in fact in the world. And a growing factor. And all countries would like to participate in this, help this to happen and benefit from this. And I think the Chinese would like that to happen too. I think they're working very hard at doing it and the idea of the AIIB is one of the ways in which they are trying to show that they can be helpful and at the same time extend their influence and soft power. But there are also issues to be resolved. They have issues with Japan, issues with several of the Asean countries, there's a code of conduct to be negotiated over the South China Sea. If they can manage these issues and contain them and prevent them from souring the overall relationship or affecting the overall security and confidence in the region, then I think we will move forward and all the infinite possibilities will be realised. 

(In Mandarin):

Q: The FTTAAP and the TPP are seen as arenas for rivalry between  US and China. Singapore is a part of both. What are Singapore's considerations? 

PM: (In Mandarin) We are good friends with the US. We are also good friends with China. China is not a part of the TPP while the US is. But the TPP countries do not rule out China joining, and China has not ruled out joining the TPP.  They are considering it, of course it's not so simple as firstly, the TPP negotiations are not done, and secondly, China is not at as mature a stage and so it's not easy to meet the TPP's high standards. 

But in the long term, after a few years, nobody can say that China will refuse to join the TPP. I think that if China can join the TPP, it's a good thing.  But the TPP is not the only route to the FTAAP. The RCEP (Regional Comprehensive Economic Partnership) is another route.  And the long-term goal is a free trade zone that covers the entire Asia Pacific, and that is the FTAAP. That is actually the fundamental thinking behind Apec's creation. 

So for China to push the FTAAP, that is a  long-term goal, not in two or five years, but I think it's at least 10 years. But we are taking the first step of a hundred mile journey, so we have time to settle its content and the responsibilities of participating countries. Then, I think, it's not about problems between China and the US, because China's participation is a good thing and US' participation is also a necessity. So at the meeting today, President Obama stated clearly that the US supports the FTAAP. Of course it's a matter of what comes first. TPP, we hope to be done by next year, FTAAP is something that will come after. But we should start work on it now.