ASIA’S VOICE OF MODERATION
Thank you for the privilege of speaking to such a distinguished audience this evening.
2. At this morning’s Global Top Leaders Session, I highlighted three key risks confronting Asia. First, the negative effects of globalisation that have taken centre-stage in many countries. Second, as a consequence, the broad shift away from multilateralism. And third, the strategic rivalry between the US and China. The US-China relationship is the most important bilateral relationship in the world. If the rivalry becomes toxic, it will disrupt Asia’s path to prosperity and peace. This will be the focus of my speech. My key question to you is: How can Asia avert a potential catastrophe arising from an unbridled contest for supremacy between the US and China?
3. How do the US and China see each other? The US now sees China as a long-term strategic threat to its global supremacy, and hence, its national security. On its part, China has come to the conclusion that the US will not allow it to grow and challenge its status as the global superpower. The recent turbulence over trade tariffs, technological competition and allegations of technological espionage are only the latest manifestations of this strategic rivalry between the US and China.
4. Is the US concern of a China threat justified or exaggerated?
5. Domestic developments in the US have reshaped how its political leaders view China. The upward mobility of the middle class is stagnating, income inequality has increased, and many Americans now blame their country’s problems on globalisation. They want to rectify the perceived situation that others are benefitting from the current global system at their expense. China and other countries are accused of taking advantage of the open US economy and of “stealing American jobs”. There were allegations that China had imposed forced technological transfers on foreign companies based in China. Lastly, the US has now been rudely awakened by the rapid pace of Huawei’s rolling out of their 5G network and technologies. I call this the “Huawei moment” for the US. It recalls the “Sputnik moment” in the 1960s.
6. The US view of China as a long-term strategic threat is bi-partisan and deeply-rooted. It will outlast the current President’s term of office.
7. That said, while China is much stronger today than in 1978 when it first opened up, the US still surpasses it in many areas, such as GDP per capita, technological capabilities and military prowess.
8. However, China possesses enormous potential to catch up in the long-term. When the per capita GDP of China reaches half that of the US today, its GDP will be twice that of the US. When the per capita GDP reaches 2/3rd, China’s GDP will be roughly that of the US, EU and Japan combined. Every year, 1.5 million students graduate with degrees in the natural sciences and engineering in China, almost four times that of the US. The key question is – How will China behave as it catches up with, or even overtakes, the US?
9. Projections and speculation aside, why do many harbour suspicions that China may become a hegemonic power rather than a benign power? I offer three reasons.
10. First, the Belt and Road Initiative. The BRI has the potential to meet the enormous infrastructure needs of the region, and improve access to Central Asia and beyond. However, there are suspicions and allegations that these projects are a means for China to set up debt traps for developing countries and turn them into pliant states. China has taken note of these concerns. At its recently concluded BRI Forum in Beijing, President Xi Jinping pledged that BRI would be clean, green and fiscally sustainable. He also emphasised that the BRI is not an “exclusive club”. Still, Western countries are sceptical.
11. Second, China has a large footprint. Other countries, especially smaller ones, have to adapt and adjust to its actions. I once remarked to former Premier Wen Jiabao at an ASEAN meeting that China has to be very careful with its every move. I used the analogy of a huge elephant moving into a pool while other animals were swimming. However gentle and friendly the elephant was, it had to be careful not to hurt or squeeze out others in the same pool.
12. China’s large footprint is probably one reason why the US is wary of the “Made in China 2025” plan, and why the US took note of China’s declaration to have a world-class military by 2050 with strong capabilities across all theatres. If you think over it, President Xi Jinping’s China Dream to make China strong again is no different from President Donald Trump’s “Make America Great Again”. By the way, India’s Prime Minister Narendra Modi also has his “Make in India” slogan too. I suppose all political leaders have to be good at producing soundbites and rallying calls.
13. Third, China’s economic reforms and transformative growth have not “democratised” its political system in the way that Western leaders had expected. Many may not recall now that China’s rise was once welcomed and encouraged by the US. In the year 2000, President Bill Clinton had said upon China’s admission into the WTO that “If you believe in a future of greater openness and freedom for the people of China, you ought to be for this agreement.” This echoed Francis Fukuyama’s argument in “The End of History” that liberal democracy was the superior form of government and would eventually be adopted by most, if not all, nations.
14. However, Western-style democracy has not taken root in China, even with the rise of a large middle class. Chinese leaders have learnt from what happened to the Soviet Union when President Gorbachev placed “glasnost” before “perestroika”. Mr Deng Xiaoping, a far more astute leader, opened up China and focused on economic rather than political reforms. It is therefore no surprise that Western leaders fret over how an ascendant China might behave with a strong leader like President Xi Jinping.
15. To me, the real angst in the US is that while China has implemented significant market reforms, its political system has not seen a similar liberalisation. China has disabused the US’ firmly held belief that democracy must come with economic progress. Democratising countries and championing human rights are pillars of American foreign policy. The fear of a large and powerful country under a non-democratic regime that can challenge Western democratic values is pervasive and palpable in the US.
16. Let me share with you my personal experience and conclusion in watching China’s remarkable transformation over the last 50 years.
17. I first went to China in 1971 on shipping business. It took me three days. I had to first go to Hong Kong to apply for a visa through the Bank of China. I then took a slow train to Canton, staying overnight there, before finally flying to Beijing. China was then in the grip of Cultural Revolution. I visited a commune, and saw workers studying the Little Red Book in the field. Bicycles swarmed the roads; the few cars there honked continuously just to inch their way forward. Everyone, men and women, wore drab Mao suits. Revolutionary music blared throughout the day; there was no escape. It was a totally alien experience.
18. China was a very poor country then. I saw men working as beasts of burden. Their best hotel, Beijing Hotel, was a 3-star hotel by international standard. I assessed then that China was some 30 years behind Singapore in development.
19. I went to China two more times in the 1970s, and made frequent visits thereafter.
20. I first met Deng Xiaoping in 1978 when he visited Singapore. At his meeting with Prime Minister Lee Kuan Yew, he expounded his vision for China – to lift his people out of poverty and modernise the country. He was thinking many years ahead.
21. I have since had the good fortune of meeting every PRC President and Premier, as well as many key central and provincial leaders. My key takeaway is that the singular mission of Chinese leaders is to bring China into the modern world, eradicate poverty, raise the standard of living of the population and become a respected First World country. China’s goals are, in fact, no different from the aspirations of other countries, such as India.
22. Professor Joseph Nye wrote in a recent article for the Financial Times that “Chinese behaviour does not suggest that it is trying to overthrow a world order from which it benefits, but is rather seeking to increase its influence”.
23. Having set the context of the strategic rivalry, I offer three simplified scenarios going forward.
24. First, existential conflict. This is unthinkable but not impossible. Hawkish elements in the US argue that to prevent China from becoming a long-term threat, the US should strike while China is still militarily weaker. This is Graham Allison’s scenario of the Thucydides Trap where an established power would not allow an emerging power to challenge it.
25. Second, unbridled strategic conflict but in accordance with some global rules. This is like Mixed Martial Arts, a no-holds-barred face-to-face combat under some basic rules. Besides military containment, the US is also embarking on economic containment, including trade tariffs and discouraging countries from partnering Huawei to set up 5G networks. It is detrimental for the world if the US and China are drawn into prolonged conflicts. Global economic growth will slow down and countries may be distracted from tackling major transboundary issues, like climate change and terrorism.
26. Third, a relationship of competition and cooperation, where the US and China can be both partners and rivals, depending on the issue at hand. In other words, they are “frenemies”. This is least likely to result in open conflict. It is the best scenario for Asia, and the world.
27. In all three scenarios, Asia’s resilience will be tested. There will certainly be collateral damage in any clash between the US and China. Many Asian countries have already felt these repercussions as US-China trade frictions have had an impact on the global supply chain. As an African proverb says, “When elephants fight, it is the grass beneath them that suffers.” It is therefore in the interests of Asian leaders to prevent the Thucydides Trap from becoming a reality. I believe it is possible for China to take its place in the world without becoming a “strategic threat” to the US. As leaders of both sides have said before, the Pacific is large enough to accommodate both the US and China.
28. We must take action to encourage the US and China towards the third scenario of competition and cooperation, and reiterate the position that the Pacific, and certainly the world, is large enough for these two superpowers to work together.
29. What should Asia do? First, understand the US and China well, including their ambitions and concerns, without taking sides. Instead, take a principled stand based on international law; and support a global multilateral system which gives small and medium-sized countries space to operate and grow.
30. Second, welcome and encourage China’s peaceful and non-hegemonic rise. Encourage China to play a greater constructive, benign and positive regional and global role. Stability, growth and prosperity will benefit Asia and the rest of the world.
31. Third, reiterate our continued welcome of the US’ presence in Asia. The US’ presence balances but does not contain China’s rise, will maintain peace and stability, as well as provide Asia with more opportunities.
32. I suggest that Asian countries caught in the middle of the US and China rivalry band together to be a “Moderate Voice”. This “Moderate Voice” is not a bloc or new grouping, but simply the voice of moderation.
33. It is a voice of countries, leaders, institutions, media and people who want to avert a catastrophic clash between the US and China. It is a voice for peace and prosperity. It is a friend of both the US and China, safeguarding the interests of all based on consensus-derived principles, rule of law, code of conduct, trust and cooperation. As many countries as possible should play a part in this, especially ASEAN countries, South Korea, Japan, India, Australia and New Zealand. It is in our interests to encourage the US and China to moderate their positions and consider the interests of global peace and stability.
34. There are three areas that the “Moderate Voice” can work together. First, throw out the negative shackles of history and build a shared future together. Hold regular retreats among leaders to build up personal rapport and mutual trust.
35. Second, identify and protect our shared values: peaceful coexistence, prosper-thy-neighbour, and respect for an inclusive rules-based international order. For example, we should be more vocal in calling out the dangers of a fragmented technology space, and work together to create neutral, common technology platforms.
36. Third, build and strengthen multilateral institutions and systems of interdependency to put values into action, as well as to enforce these values when disagreements occur. On this note, countries should conclude negotiations on the Regional Comprehensive Economic Partnership as soon as possible to signal a shared commitment to free trade and multilateralism. It will also be good if more countries, especially the US and China, join the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership).
37. Let me conclude. In 1944, 44 nations came together to establish the IMF. Then US Treasury Secretary Henry Morgenthau said, “None of us has found any incompatibility between devotion to our own countries and joint action. We have come to recognise that the wisest and most effective way to protect our national interests is through international cooperation, through united effort for the attainment of common goals.” His statement rings true especially today.
38. Of course, realpolitik is not so simple. We have to be realistic and practical, while maintaining our ideals. If we want to be independent and neutral in the US-China rivalry, we must exercise our collective influence as the “Moderate Voice”, and as friends of both the US and China. We all have a stake in building a cohesive and peaceful world.
39. Before I close, let me return to the African proverb that when elephants fight, the grass beneath them suffers. I will give this an Asian twist, “When elephants make love, the grass beneath them also suffers.”
40. We should avoid being the grass beneath the elephants, and choose to be a Voice of Moderation that even the elephants will pay attention to. Thank you.