Gideon Rachman: Thank you Anja for the introduction, and thank you Minister for joining us. As Anja previewed, I am sure the audience, and me as well, are very keen to hear your views on US-Chinese relations and Singapore's role in that. But I thought I would start with COVID-19, which is after all the reason we are all meeting virtually rather than in person. My impression is that Singapore has done pretty well. But then you have also had crises, particularly around migrant workers. What is the current situation in Singapore?
Minister: We have had a serious problem with the migrant workers living in the dormitories. We have about 300,000 of them living in dormitories. And as you know, with the benefit of six months of data, if you live in a dormitory, on an aircraft carrier, on a luxury cruise liner – regardless of the class of accommodation, if you are eating together and interacting intensively together, you are meeting, you are socialising – you are at high risk. That is where the centre of gravity of our infection has been.
Fortunately, in the local community, as far as citizens and permanent residents are concerned, we are down to just a handful of cases a day. We have done well at the community level.
We are sweeping up the problems in the dormitories. We would have completed testing all two to three hundred thousand of them by the end of this week. That is why the numbers still look high: because, in fact, the cases that we are detecting now are asymptomatic. These are cases that would not otherwise have been diagnosed. But we are testing because we want them to be able to get back to work, and to get back to work safely.
Rachman: On getting back to work, I wonder about the impact on the economy. Singapore is one of the great cities of globalization – transport hub, finance hub – you name it. Everything is frozen. How are you coping economically?
Minister: First, not everything is frozen. As I said earlier, tourism and aviation, those are certainly deeply affected. But trans-shipment, transit passengers, logistics – they are all still flowing. Indeed, it has been critically important for us to maintain our status as a hub. At this point in time, to keep it open, and to let everyone know that even in the depths of a crisis, we are not going to panic. We will remain open, we will not impound supplies – whether it is masks or essential drugs or medical supplies – all these have continued to flow. That has been important. Nevertheless, the fact that we needed to have a circuit breaker of about eight weeks has had a major impact on our economy. In the second quarter, there was a significant dip; and we expect to end this year somewhere between -5 to -7 per cent. For a place like Singapore, with 55 years of almost uninterrupted growth, that is a big deal. So it has had an impact.
Rachman: And as if COVID-19 wasn't enough, we are also now in this downward spiral of relations between China and the United States. And you are both an economic and a political hub between those two countries. I would say probably the only country I can think of that could really claim to have a special relationship both with the People's Republic of China and with the United States. So you must be in a slightly uncomfortable position. But before I ask you specifically about how Singapore is handling this as a nation state, can I ask you, just as an analyst, how worried are you by this change in the environment and the rapid downward shift in the relationship?
Minister: We are deeply worried. Let me take a step back, and share with you. For those of you who haven't been to Singapore, the way to think about Singapore is to imagine downtown Manhattan having been rejected by upstate New York, and having to be an independent, city-state. In the case of Singapore, trade is three times our GDP. I say this so that you understand that when I talk about free trade, it is not just a debating point. But it is absolutely essential for our survival and indeed our economic existence. That's the first factoid.
Second factoid: if I were to ask you who is the biggest investor in Singapore, the answer is the United States of America. In fact, the United States of America is more invested in Singapore and Southeast Asia than it is in India, China, Korea and Japan combined. Every time I meet President Trump, I remind him of that. I remind him that America has significant equities in our part of the world. Third factoid: the largest trading partner for Singapore is China. If you want to add a fourth factoid, one of the largest foreign investors in China is Singapore.
So, Gideon, when you say we are in between, and that we have a special relationship with both the United States and China. That is not an assumption; that is a fact, and it is based on real data. So we watch this unfolding dynamic relation with great concern. From my repeated trips to Washington, what I have felt is that there is increasingly a bipartisan consensus within America – certainly within the political class of America – that China is a competitor, a rival, and I would say a strategic rival; and they are worried about China. Both parties are trying to look at the entire repertoire of levers, which they may use against China.
Rachman: When your interlocutors in Washington say that to you that we regard China increasingly as a strategic rival, what do you say? Do you say, you are wrong, you shouldn't be thinking of it that way; or do you see their point?
Minister: It depends on how much time they have. My starting point would be that if you look at the end of the Second World War, the United States constituted 40 per cent of global GDP. At that level, it made sense for the United States to underwrite the liberal world order as we know it, which has been a formula for peace and prosperity, especially for democratic Southeast Asia, of which Singapore is part. The problem now is that after 1978, China opened up; in 1991, India opened up. With the fall of the Soviet Union, even Russia and the rest of Eastern Europe came online. All these are actually positive developments. But it means that the United States today constitutes maybe about 25 per cent of global GDP. Which means that it is an entirely legitimate question for the American voter to say: wait a minute, why does the United States have to pay in blood and treasure to underwrite this world order when they are down to about 24 per cent and probably shrinking? The key point is that we are moving from a unipolar world into a multipolar world. It is very important for everyone to understand the implications. Because if you wistfully think about the so called good old days and hope that America would somehow go back into the good old days where it will single handedly carry this world – that is not realistic economically, militarily, and certainly not realistic politically. So the current Administration's focus on putting America first is actually a rational political development to a change in the world. Internally within America and at a global level. So I do not start by saying that America is wrong. I make the observation that it is a perfectly legitimate question.
The next question that arises is, what of the future – what does a multipolar world look like? What will American leadership in a multipolar world look like? What should America focus on? Let me give you some personal insights. When I was Minister for Environment, I spent many years as a ministerial facilitator in the negotiations that ultimately led to the Paris Agreement. I can tell you as someone who was on the inside, in the green room so to speak, that the only reason we could get a successful Paris Agreement was because America and China were on a congruent course, and made it happen. Here is the rub of it: all our future strategic challenges are going to be transnational. Climate change, pandemics – which we can discuss more of – cyberspace, outer space, etc. All these big challenges will require cooperation, multipolar leadership, multilateral institutions and processes. I just had this chat with Mike Pompeo yesterday and I said, we need America back in the saddle. But there will be multiple horses. It will not be one horse, and one man on a horse.
Rachman: You had the privilege of talking to him directly. I have been reading his speeches, he is very much on the line now that American policy towards China was a mistake, a misperception of how China was going to develop, that they are ideological rivals, strategic rivals, etc. I would imagine that he would be putting you on the spot and saying, Mr Minister, whose side are you on? So what do you say when you are asked that.
Minister: We have a great relationship, so I have the luxury of being completely frank and open with him. I explained to him that there is a kind of a Goldilocks syndrome going on. You know the story of Goldilocks, you want the porridge to be neither too hot nor too cold. I told him that in Asia, there are two opposite polarities that we worry about. One is a collision, with a hot war with China. On the other hand, we are also worried that America may pick up its marbles and decide, well, I don't want to play this game in Asia anymore. In fact, what all of us in Asia want is for America and China to sort out their strategic differences, find a modus vivendi to resolve these differences, and also to be able to collaborate on the multilateral global challenges that we face; and on that basis, to continue to engage Asia.
Both America and China have got huge equities in Asia. For China, just this year, its largest trading partner is now Southeast Asia. It is not even the US or the EU. And for the US, its largest chunk of investment is in Southeast Asia. Half a million US jobs depend on trade with Southeast Asia. My point is not to look at things in binary terms, with enemies and friends, and choose sides. But to recognise that we are transiting to a multipolar world, that you must not look at things in purely binary terms. By all means, recognise the differences and resolve the differences; but do not lose sight of the larger equities at stake. To be fair to the current Administration, they listen – they may not agree with me, but they listen politely, and we have perfectly civil and constructive discussions on that basis.
Rachman: Nice to hear. I have talked a lot about how America's attitudes been changing, but as I said at the beginning, you know China very well as well. So I think people will be interested to have a sense of your view: are the Americans and others right to think that something has changed under Xi Jinping, that China has become more assertive? People often say the old days of the “hide and bide” are over, that China is clearly intent on being the dominant power, at least in its region.
Minister: A couple of points I would make to that. First, the transformation in China since 1978 and the way they have uplifted hundreds of millions of people from abject poverty through this hybrid system of capitalism, party dominance, and integration into the world economy. This has been a historically unprecedented achievement. And quite frankly, an achievement worth celebrating – both within China and outside of China. We have all benefited from that development, because if China had not opened up, reformed, and transformed 40 years ago, I think the world would be in a much more perilous state than it is now. That is the first point.
The second point is that you need to understand that China is a civilisational state. It's not really even a nation state. It is a civilisational state with a very long view of history. When they look back in history, 1000 years ago – who invented gunpowder, paper, printing? Who had oceangoing fleets, perhaps even getting to America before Columbus? It was China. Did they make a strategic mistake after that? They did, by turning inwards. For China, the last century or two, because they missed the Industrial Revolution, have been centuries of humiliation. Now, they feel – quite rightly – they are on the verge of re-establishing their position in the world order. That to me is an entirely legitimate ambition.
Another point worth emphasising about China is that because it is a civilisational state, they do not have the same missionary approach that the Europeans, and to a significant extent even the Americans, have had. They have no intention of creating or molding us in their image. Correspondingly, they also have no intention of being changed into an American image. That is why, if America set out 40 years ago hoping that China would be transformed and changed into its likeness by its engagement, that was always wishful and misguided thinking. We need a combination of realism and appreciation of history and culture on both sides.
The point I am trying to make is that this rise of China is really part of this transformation into a multipolar world, and into the multipolar world I will include Europe. If we look forward over the next two to three decades, do not forget that there are significant young hungry populations – ambitious populations – in India, in the Middle East, in Africa and in South America. We need to come to terms with this world. It is important not to harken back to a misremembered past, but to focus on the future, and how a multipolar world is both essential for peace and prosperity, and also for transforming the way we look at diplomacy. All this whole canard about you are either with us or against us, does not work in a multipolar world. Fortunately, in the case of Singapore, we have had long, strategic relations with both superpowers, based on trust and openness. We have been able to speak truth to power – courteously, obviously. But nevertheless, we've been able to say that and not to be offensive.
Rachman: Well, best of luck. I sort of feel that we're all going to be put on the spot increasingly, that is certainly the case the UK found, with Huawei. I will ask you one more question; but before I do that, I want to let the audience know that we are taking questions. The way to do it is to use the hands-up facility, and I will then call upon people in about five minutes time. If I can ask you on a couple more specific controversies at the moment. I alluded to this sense of China getting tougher or harder to deal with; Hong Kong is something that people are looking at; and the Uighur issue. When Mr Pompeo says to you: look, there are terrible human rights abuses taking place in Xinjiang, we can't ignore that. I would be interested in your response to that. Also specifically, as the other great hub city to Hong Kong, how do you view what is happening there? Do you think that Hong Kong's role as a hub is in some sense in question now?
Minister: Let's deal with Hong Kong first, because rightly or wrongly, many people often like to compare and contrast Hong Kong and Singapore. After all, we are both entrepots. We are both paragons of the modern economy. The first thing I would say as someone with an appreciation for Chinese history, is that Hong Kong was an icon of Chinese humiliation. It got handed over to the Brits because of the Opium Wars. So the return of Hong Kong to China was both inevitable and essential. That is the first point.
The second point is that if you look at what has happened in Hong Kong since the handover, and in particular over the last few years, you witness a deeply divided, fractured society. The riots are symptoms of this underlying fracture, and even the violence that sometimes spills over. Hong Kong was also always supposed to have been able to pass a national security law. This was provided for in the Basic Law. But for a variety of political and social reasons, it could not get to this stage. If you put yourself now – and I am not trying to be an apologist for Beijing – but if you put yourself in their position, and ask yourself what is going to happen over the remaining 27 years – is the current trend sustainable? Is it good for stability, for progress, for economic development in Hong Kong? I think the answer, certainly in a significant portion of Hong Kong’s population, is that the current trends are unhealthy and not sustainable.
So, China decided they needed to be more interventionist, which I think we are witnessing right now. The passage of the national security law from Beijing is an example of that. They have asserted that this is entirely consistent with their sovereign rights, and entirely consistent with the Basic Law. They have also asserted that it will not affect the majority of Hong Kongers and their businesses. I think we will have to see how things pan out on the ground, in reality. Unfortunately, this has also now become part of the hurly burly and the push and shove between China and the United States, and to some extent the United Kingdom as well.
Let me just say as an Asian, or as fellow city in Asia, that actually, all that Singapore hopes for is a stable, calm, peaceful and prosperous Hong Kong. If they do well, it is good for Northeast Asia, it is good for Asia, and it is good for Singapore. That is how we look at it. I can honestly tell you that we wish them the very best in solving what is essentially a political problem first within Hong Kong society, and hope that this does not blow up into yet another international incident that will destabilize Asia.
Rachman: I mentioned the Uighurs as well. Do you want to say something about that?
Minister: To be honest, we did not discuss the Uighurs when I spoke to Mike yesterday. So I do not want to make comments.
Rachman: Fair enough. Now let me go to the questions from the floor. I have got two possible questioners. Could I call upon Rich Barry? That takes about five seconds or so till he comes up.
Rich Barry: Good morning Minister.
Minister: Hi Rich.
Barry: Good morning sir. I am calling from Hawaii this morning. Thank you for joining us. I really enjoyed your comments and hearing your interview. Couple of quick questions. Specifically on Hong Kong, how do you look at the agreements that the PRC made in Hong Kong when the British handed it over, and the erosion of rights there? I understand perfectly your point about the history there, how they feel about it. I think maybe the bigger concern in the US government has been the international agreements that they feel like had been broken based on the handover. The second question I want to ask you about was how do you see the issues of intellectual property that we tend to have with the Chinese? How might that get in the way of international trade and finance from your perspective in Singapore? Thank you again for your comments.
Minister: Thank you for two excellent questions. I am not in a position to judge compliance or otherwise with international agreements. But what I would say, is that as far as the Chinese are concerned, Hong Kong is an inalienable part of China. They remind us frequently that this is a domestic matter. We have to respect this issue of sovereignty. But having said that, as I said in my earlier comments, there is clearly a political problem within Hong Kong society, and this is something that Hong Kongers themselves will have to resolve, and have to resolve with their capital as well. Time will tell how this will unfold. I really do not believe that our commentary from outside would necessarily be helpful for this essential process of reconciliation and focusing on the challenges of the future for Hong Kong society. It is a complicated situation. I really don't think it is helpful for us to simply cast judgment from overseas. So that is how we see it. As I said, the key thing is: will Hong Kong society become more united, more cohesive, more capable of settling their social and political challenges? For instance, housing for young families, jobs, the economic restructuring which they need, Hong Kong's role in the Pearl River Delta, and as a portal into the larger Chinese economy? Actually, for most people on the ground, certainly for my Hong Kong friends, those are the key concerns: jobs, security, homes, prospects for the future, peace and stability. But these are things which in our conception of a nation state, are sovereign matters which are best handled by the political leaders and the people within the country itself. So that is how I would view it.
Your second question was on intellectual property. On this point, I want to say that as far as Singapore is concerned, we have a free trade agreement with the United States, with a whole chapter on intellectual property. In fact, I believe that as China's economy becomes more sophisticated – and they are now one of the largest registrants of patents in the world – China has an equal, if not more important stake in intellectual property protection. Certainly in Singapore's experience with our free trade agreement with the United States – and in the TPP, which the United States unfortunately did not become a part of – the intellectual property protections in the free trade agreements, including the TPP, are an important step forward in raising standards of intellectual property protection. I make no apologies for taking every opportunity to remind America that we have left the door open for the TPP. The ambitious standards for intellectual property protection, for environmental protection, for labor protection, are all worth subscribing to. Even China is now looking – a bit quizzically perhaps – but looking seriously at joining the TPP. So the point is to look at things in a dynamic and forward perspective. I am very sure that China will have to be far more protective of intellectual property as it goes forward. This is just the natural evolution of things. If you go back in economic history, I think even the UK and US had disputes with intellectual property a century or two ago. But that is a fact, and these things happen. So let us not be bogged down by it. Let us look at how we can move forward. I am optimistic that intellectual property, especially in this knowledge-based economy, is the new oil. The difference between oil and intellectual property is that the value is enhanced by sharing and openness, and it is not a question of scarcity.
Rachman: Okay, thanks. The next questioner now I'd like to call upon is Evan Locks.
Minister: Yes. I think it takes about five seconds.
Evan Locks: Gentlemen, can you hear me?
Minister: Yes we can.
Locks: Okay. Thank you. Good morning from Aspen, Colorado. The Washington Post made an interesting list of flashpoints between the United States and China. They range from Tik Tok, Hong Kong, spying, Huawei, media, tariffs and trades, Xinjiang, travel, research, South China Sea, Taiwan, delisting of Chinese companies, Tibet. However, none of these have had the impact of actually killing as many Americans as the Hiroshima bomb killed Japanese – i.e. the coronavirus. Do you believe, from your perspective, that China owes a debt to the rest of the world for not containing it through international travel, when they clearly restricted and locked down Wuhan to domestic travel?
Minister: Let me give you a perspective from Asia. China was the largest source of tourists for Singapore. If we rewind time to mid-January, most of us had not heard about COVID-19. It was not even named yet. You just knew there was some question mark about a potential infection in Wuhan and some questions about whether there was human-to-human transmission. I remember waking up about two days before Chinese New Year and hearing that China was planning to lock down Wuhan. Mind you, Wuhan is a city much, much bigger than Singapore. I can tell you as an Asian, to contemplate shutting down a city that large, two days before Chinese New Year, is a big deal. So there may have been a delay; but I have no doubts that once they understood the gravity of the situation, they did things which most of us would frankly have hesitated to do. Then when they did so, they did so decisively, comprehensively. To be fair, if you look at the results, the outcome within China itself, I think you have to give credit where credit is due. They have shown that border restrictions, quarantine, testing, social distancing, wearing of masks, the willingness to take decisive actions – even at great economic costs – is worthwhile. I am sorry if I am not willing to enter into a blame game. In fact, now, with the benefit of six months, let me put it to you this way: no government has executed an anti-COVID strategy perfectly. All of us have made our share of mistakes. But at the end of the day, this is first an international issue which requires collaboration and cooperation, rather than blame. There will be time for blame after the crisis is over. But right now, we need to focus on cooperation and collaboration.
Second lesson: we need to act earlier rather than later. And we need to be prepared to pay the cost economically; because as long as COVID is not controlled, the economy can't recover. Opening prematurely or recklessly is very dangerous and will be completely counterproductive.
The third point I would make is: the only way we are all going to emerge from this crisis is if a vaccine is found. There are a couple of hundred vaccine candidates. But let me say this – if history is a guide, we don't know so far of any effective, long-term vaccine for coronaviruses. Even if a vaccine is found, we do not know how effective it will be or how long it will last. What this means is that we are going to have to live with this virus for at least one or two years; perhaps even longer. If you want to be more depressed. let me put it to you this way: look at the figures in Singapore, our mortality rate today is about 0.05 per cent. That sounds wonderful and very low. It of course reflects the access to great medical care which we have in Singapore but let me put it to you this way. But I do not believe this is all due to the wonderful system that we have in Singapore. The truth is, in most parts of the world where mortality rates are apparently higher, you are under-diagnosing the extent of the spread.
What is even more worrying is this – I do not believe COVID-19 is the real big one. If you look at the mortality rates of the pandemic influenza in 1918, it was far higher than this. If you look at SARS, it was far higher than this. What I am saying is that this is actually a rehearsal for the really big pandemic, which I still believe is overdue. We need to use this time to prepare ourselves for the next pandemic. That means investing in research and development, governments collaborating – because the only way we're going to be safe, is when every one of us is safe. We believe that vaccines are a global good. We believe in vaccine multilateralism. We believe we need to hedge our bets, by chipping in resources into a common pool. And depending on which vaccine emerges, quickly expand the access to it, and especially to countries which are most vulnerable and where the population need it most. My point, again, is that this is a world that is crying out for multilateralism, and we need to do that. Not focus on yesterday’s battles or on the blame game, which is ultimately unproductive and will not provide solutions for the future challenges that we are confronting.
Rachman: Okay Minister Balakrishnan, I should also add that you are also Doctor Balakrishnan. So when you tell us that this is not the big one, and that there are other big things around the corner, you speak with professional expertise as well.
Minister: But I am not the only one saying that; this really is just a dry-run.
Rachman: A quick follow-up to that and then I will hand back to Anja, who will close us. A theme of your comment throughout has been a plea to look at multilateralism and not to see things in competitive terms. I get a suggestion that maybe we are looking at the wrong issues, that you think we are looking at 20th century issues of economic and strategic rivalry rather than things like pandemics or climate change. But I must say that as somebody who writes about international affairs, I can recognise what you are saying, it makes total sense. But I just feel like things are moving in the opposite direction – is that how you see it?
Minister: I guess as a professional diplomat, you have to be optimistic. Yes, I see problems, and it is important to be realistic in our assessment of the problems. The super power rivalry, the risk of war has gone up. The inability of the world as a whole to cooperate and deal with multilateral problems is playing for us all to see. The impact of the digital economy, its impact on jobs, the stagnation of middle-class wages is evident in all societies. I say this so that you understand that I am not a starry-eyed optimist. What am I worried about if I look at history? If I go back to the period from 1870 to maybe 1914, think about that period – and I spend a lot of time thinking about that period – that was a period of globalisation, a period of technological change – steam ships came about. That was a period when there was a rising power, Germany. There was an old hegemon which the sun never set on, the United Kingdom. Everyone said, well there is interdependence, war does not make sense. Yet, we know that we stumbled into the First World War. Then from about 1914 to 1945, world trade as a percentage of global GDP fell to about 10 per cent. After 1945, it is really Pax Americana. As I said earlier, America constituted 40 per cent of global GDP, and it was worth America’s while to underwrite the world order. You saw a golden age from 1945 until about 1980; but that golden age was really confined to Democratic, capitalist free markets. Singapore also benefitted from that golden age. But after that, after 1980, China opened up, and India and the rest came online. In a sense then, the beginning of the end of the golden age of capitalism was already written on the walls. 2008 – 2009, the global financial crisis, neatly punctuates the end of that age. The last decade has therefore been a turbulent period of political, social and economic change. It is important for us, whether we are professional diplomats or commentators, to understand that and to posit where we are on these global currents.
Your question really is at the end of all this, am I optimistic or am I pessimistic? I still remain optimistic. If you talk to all the players – and I have had the privilege, or the luxury, of talking to all the major players – the truth is no one is blind. Everyone recognises the dangers. Everyone sees it from their own perspective. Everyone wants to right what they think is a wrong, but I still believe that because we truly are a more interdependent world. I think that America and China – I am hopeful – will arrive at some modus vivendi. I say that because I have seen it for myself at least on the Paris Agreement. I think they will have to work out some kind of arrangement for the weapons of the future, and we know there are many technological marvels which could be used for military use. We are all going to be confronted by pandemics worse than what we are facing today. We are going to be confronted by climate change with far greater economic impact that what we have faced. The two examples I have given you, on climate change and pandemics, will require global cooperation. So maybe we might be forced to unlearn some old habits and learn some new ways of cooperation. That is why I remain optimistic; perhaps it is just the occupational hazard of being a diplomat.
But seriously, I am speaking from the case of Singapore, where we have dealt with both Democrat and Republican Administrations. What has been remarkable for us has been the consistency of American foreign policy. If you take a 70-year period, individual decisions, individual issues, there will be noise, there will be fluctuation. But generally, America has been – and I know Joseph Nye is going to talk about the moral elements of foreign policy, but I can maybe make a preliminary plug for it – America has been a hegemon in our part of the world, but it has been a constructive and welcome hegemon. It does not mean that we agree with America all the time, but we recognise that there is a moral dimension to American leadership. In general, despite the mistakes American leadership may have made, it has been positive. This formula of a liberal and rules-based world order, multilateral institutions and processes, has been a formula for peace and prosperity. In the case of Europe, the fact that they had the European Union and the Marshall plan has made war in Western Europe unthinkable. Think about in the last century – Germany invaded France something like three times in 70 years. In the last 70 years, war has become unthinkable in Western Europe. Now if we can continue to build on that, I think the future remains optimistic. So that is my spiel.
Rachman: Thank you very much. It’s always nice to end on a note of optimism, particularly in a very worrying time. You even went beyond the call of duty and segued us nicely to the next session with Joe Nye, so you could always become a moderator later. Thank you so much sir, Minister Balakrishnan, that was great. I will now hand it back to Anja.
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