Bloomberg New Economy Forum

Sino-US differences are many and deep: PM Lee

The state of Sino-US relations and trade came up in the discussion between Prime Minister Lee Hsien Loong and Bloomberg editor-in-chief John Micklethwait at the Bloomberg New Economy Forum gala dinner in Singapore on Wednesday. Here are edited excerpts.

PM Lee Hsien Loong speaking to Bloomberg editor-in-chief John Micklethwait at the Bloomberg New Economy Forum gala dinner in Singapore, on Nov 17, 2021. PHOTO: MINISTRY OF COMMUNICATIONS AND INFORMATION

John Micklethwait: Just to begin, China and the US. Earlier this year or late last year, you called for a truce. The past week we have seen the deal at COP26 about climate change and we have now seen (presidents Xi Jinping and Joe Biden) talk. Does that amount to the truce that you asked for?

PM Lee Hsien Loong: I think it is a necessary beginning. The differences between the two countries are many and deep. It goes beyond individual issues to basic mindsets. They are not going to be resolved or reconciled in one meeting or one deal. But it is good that the US and China could make some understanding at COP26. It was crucial for the two leaders to be able to have this virtual meeting and speak frankly to one another.

Micklethwait: How would you describe these two different mindsets? What is the fundamental difference as you see it?

PM Lee: The two see the world in very different ways, and see each other in very different ways. For the Americans, it has become a bipartisan and very strong consensus that China is not just a potential threat, but a challenger and a serious problem for them, an opponent almost. I am not saying that the administration thinks like this, but I think it is the broad view in American society, at least the think-tankers.

At the same time, the relationship with China is not just contesting strategic balance which needs to be worked out, but has a moral dimension to it - right and wrong, I am democracy, you are not, I am human rights, you are not. If you define issues like this, it becomes very difficult to transition from that to saying I have to co-exist, we both live in the same globe.

On the Chinese side, I think there is a very settled view now amongst many of their journalists and population, I imagine some of the leaders too, that America wants to slow them down and stop their emergence, and America regrets having helped them, given them permanent MFN (Most Favoured Nation status), allowed them into the WTO (World Trade Organisation), facilitated investment growth and made them now where they are.

Secondly, there is the sense that China's time has come, and we shall take our rightful place in the world, which is quite understandable. But then, how do you take your rightful place in the world in such a way that a very big player leaves space for many not quite so big players. That is a sensitivity and an art which does not come naturally.

Micklethwait: That problematic mindset you described, does it also involve 'China's time has come and America's is going'?

PM Lee: Yes, there is that part as well. There is a strong sense that the East is rising and the West is declining. In particular, that America is a declining power. I think it is wrong. I can see what makes them think like that. But if you take a long view, you really have to bet on America recovering from whatever things it does to itself at the moment.

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Micklethwait: Can we look at one of those things it is doing to itself at the moment? We heard from (US Secretary of Commerce) Gina Raimondo earlier at the conference. She is out here, selling very eloquently, the US Indo-Pacific economic framework. It is a trade deal without a trade deal. It does not have the trade deal at the back of it. I suspect that people like Singapore would much rather that the TPP, now called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), was back. America is trying to sell something that is hard for you to naturally gravitate towards.

PM Lee: These are the realities of politics. The TPP would have been the ideal approach. It took America some time to come to that. To decide that this was the way it wanted to engage the region, and to push for this flagship substantial project, which would not only show but actually be a deepening of America's engagement and relationship with Asia.

(Former US president Barack) Obama personally adopted it. He put a lot of time pushing the leaders and making the negotiations make progress. But I think what he did not do, or just that it was not possible to do, was to push it enough domestically and in Congress. In the end, he ran out of time and it was not possible to smuggle it through a lame duck Congress. Anyway, Hillary (Clinton) also disavowed it, and when (Donald) Trump won, that was the end of the matter. And you are now in the position that it is dead. I am not saying it can't be resurrected, but resurrection doesn't happen after three days or three years either.

So therefore - what does America do if you cannot do that? Well, you still need to be able to engage with a substantive agenda and if I cannot do that, I can talk about digital cooperation, green cooperation, human resource cooperation. One piece is missing, but at least I am not missing from the field of being engaged.

Micklethwait: You are very compassionately talking about it from the perspective of a seller when you are actually the buyer. Do you still think it is something that is useful?

PM Lee: It can be useful. We are pitching the idea of a digital economy agreement with the US, with some grouping of the Apec (Asia-Pacific Economic Cooperation) economies. We hope the US will participate in this. (It is) not so easy for a Democrat administration to do, because the administration has come in promising to look after the middle class in the US and everything needs to link back to that. Actually, everything will ultimately link back to that but if you insist on a direct and immediate connection, you may miss out on many indirect but valuable projects such as this one.

Micklethwait: China is now applying to join the CPTPP. So is Taiwan. How do you assess the chances of either of those or both of those joining in?

PM Lee: Well, the way that CPTPP was constructed was that it would welcome anybody who would come along and meet its quite high standards and the spirit thereof. With a TPP, the idea was we have this grouping, one day it is conceivable China would be interested and it is more likely that you can have a deal between the US and China in the TPP framework than the US and China bilaterally make an FTA (free trade agreement). I think both sides were coming around to considering that. Even the Chinese who initially pooh-poohed this...then they decided to study it. They think about these things for a long time and eventually said that perhaps we should take an interest in it. Unfortunately, (the) Americans are not there now.

From the point of view of economics, I think it can make sense. From the point of view of process, the decisions are made by consensus by all the CPTPP members and when they look at it, it is not just economics which they will look at, but they will also consider the political considerations, the strategic and the security factors, and also any bilateral issues and concerns which they may have been discussing.

Micklethwait: And the South China Sea could become part of it...

PM Lee: The South China Sea is not a trade issue but there are also trade issues between the Apec economies or the CPTPP countries and China. I hope they can work it out. In the long term, it is good to have more trade rather than less trade. I still believe that, although it is not so fashionable now. I hope these things can be worked out in a way which (will) enhance the stability and integration of nations.

Micklethwait: Singapore has always been a great benefactor or beneficiary of multilateralism. What was interesting this morning was that we had (Chinese Vice-President) Wang Qishan giving an address and he probably mentioned the word multilateral and multilateralism about 20 times. This new China, coming towards you and bearing gifts, promising that it is multilateralist - do you believe in that?

PM Lee: I think it is the right thing for them to say and the right thing for them to try to do. I mean if China came along and said, 'I am a unilateralist', you would take it amiss. They claim to be a multilateralist, they do want to join all these organisations. In fact, they would like to (have) some of their people lead these organisations. There have been some UN organisations where fierce contests have taken place. And they would like to influence the rules in these organisations, all of which is legitimate because they are a considerable power and they want to have commensurate influence in the world.

Question is, how do you make it truly multilateral after a very major power has joined the group. In principle, the five principles of coexistence, as big or small, we are all equal, but in practice in the UN, everybody knows that some countries are more equal than others.

Micklethwait: It could be an elephant in the room, so to speak. It could be much bigger than all the other partners.

PM Lee: Yes, and you have to engage the power and the power also has to have some self-awareness that this is the way I operate, which will ensure my acceptance and therefore a continuation of my influence without resorting to brute force.

Micklethwait: Has China yet reached that point of thinking that way, in a way that you could imagine them sitting beside you, treating everyone as somewhat equal?

PM Lee: Well, no big power treats everyone as somewhat equal, but some do so better than others.

Micklethwait: They do it more politely.

PM Lee: No, I would not say more politely. Look at the Americans, they have been in Asia-Pacific since the war, at least; they were in the Philippines even before that. But to be, after 70 to 80 years, still welcomed in a region and not just be seen as an ugly American, it tells you that there is something about this.

Micklethwait: What would it say about America's role in the region if China joins CPTPP and they do not?

PM Lee: Well, if China joins CPTPP, America still has a role in the region. You have investments, trade, interest, friends and allies here. We hope that amidst the many far-flung preoccupations around the world, you have the time to cultivate a part of the world which may not squeak so loudly but which is a valuable and profitable relationship.

Micklethwait: If you were Joe Biden, what would you do to change that balance?

PM Lee: First, I would try to move on trade. You cannot do an FTA but you do want to move forward on trade. Secondly, to develop the relationship with China, because if that relationship is sour it is much harder for every country in the region. Thirdly, do not stop with China, also cultivate your other friends in the region and allies. The second part, Biden is trying to do. It is a long journey but he is starting. Friends and allies, his approach is quite clear and I think people do believe that. The last thing he can do is to ensure the president after 2024, whichever party, (is) of like mind. That is, sadly, not within his giving, but that is something which is very important. You must be able to look beyond because America's interests extend well beyond 2024.

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