Speech by former Minister Mentor Lee Kuan Yew and current Senior Advisor to Government of Singapore Investment Corporation at the Ford Theatre's Abraham Lincoln Medal Award Ceremony in Washington DC on 18 October 2011

Mr Wayne Reynolds, Chairman of Ford's Theatre

Mrs Catherine Reynolds, Chairman and CEO of The Catherine B. Reynolds Foundation

Mr Rex Tillerson, chairman of Exxon Mobil and vice chairman of Ford's Theatre

Distinguished guests

I thank Ford's Theatre for this great honour. America has been a good friend of Singapore and Singapore has been a reliable partner of America. We have worked very well over the last five decades for the peace and prosperity of our region.

As I look into the next decade, the major question before us is: how will the United States deal with the new rising power, China.

For many years, the rise of China has altered the nature of China-US relations. Equable relations between the two are most important for peace and stability in the Asia Pacific, and indeed the whole world. This relationship has its ups and downs.

In the 1940s, America felt it had "lost China when China turned communist" and thus began a dark period of relations during the Cold War. Nixon's opening to China resulted in the US and China working together to check the aggression of the Soviet Union. Next, the US supported China's entry into WTO which spanned the Clinton and Bush 43rd Administration. This period saw the US and China working together.

US dominance in the Pacific and the world has been unchallenged since the end of the Second World War. In 1945, an exhausted Britain passed the mantle of leadership to America as the leader of the world.

After six decades, that US leadership faces a multi-faceted challenge in the rise of China. If China can maintain its present average growth rates over the last five years of more than 10% per annum for the next few decades, entirely plausible given its vast pool of talent in the west as yet untapped, she will have a total GDP larger than America's. Its rise as an economic power will be the most dramatic event of the 21st century.

Deng restored growth after Cultural Revolution

After the Cultural Revolution in 1966/7, when Mao created constant struggle to generate perpetual revolutionary fervour, Deng Xiaoping, the pragmatist, restored stability and growth. Deng Xiaoping visited Singapore in November 1978 in his capacity as then-Vice Premier of the State Council. It was a revelation to him. He saw how an island without resources was able to grow by inviting multi-national corporations (MNCs) to invest in Singapore. The MNCs had the markets for their own products. Not only did Singapore provide a low-cost production base, it was also stable and safe for foreign investments. In Deng's own words, as he went back to China and said, "There is good social order in Singapore. They govern the place with discipline. We should draw from their experience, and do even better than them." When he returned to China that December 1978, he announced the opening up of half a dozen seaports as special economic zones, and invited investments and trade. They succeeded. Eventually, in 2001, China opened up to the whole country to the world when Premier Zhu Rongji brought China into the WTO.

China - the heavyweight

China is a heavyweight. America will have to adjust its posture and policies as a consequence of this rise. Does it need to be confrontational? Usually, in history, when a new power emerges to challenge the supremacy of the incumbent, war is likely. This is no longer possible when both China and the US have nuclear armaments. It is my belief that the Chinese are in no hurry to displace the US as the number one power in the world and to carry the burden that is part and parcel of that position. They are quite comfortable in being part of a larger group like the G20 where their views will be taken seriously and economic interests safeguarded, but the responsibility is shared amongst 20 member states. In addition, as a permanent member of the UN Security Council, its broad strategic interests at the UN are safeguarded. To grow, China needs American markets, American investments and, with it, American technology. China also wants to send thousands of her students to American universities and research institutions to work and learn the kind of intellectual milieu that enables Americans to be so innovative and creative.

At present, both realise that they must work at the relationship. Americans have to eventually share their pre-eminent position with China.

The US has certain advantages. Its use of the English language makes it open to immigrants. So long as it continues to attract foreign talent, it will do well. On the other hand, the Chinese language is a high hurdle for immigrant talent. China is also concerned with the unequal development within the country and wants to resolve its inequality between the coastal regions and the interior.

China more assertive

From the 1980s, China followed Deng Xiaoping's policy to emphasise its peaceful rise. In the last few years, China appears to have taken a more assertive stand in international diplomacy. It has claimed ownership over the sandbanks and islets in the South China Sea where geologists believe there is oil and gas. That led to Secretary Hilary Clinton in Hanoi at the ARF (Asean Regional Forum) meeting to remind the region that the Law of the Sea should resolve this problem.

Young Chinese more assertive

Many young Chinese have gone overseas to study and work in the US, UK, Europe, Australia and Singapore. They are eager for China to take its 'rightful' place on the world stage and to show leadership. Their self-confidence has grown enormously as they watched US and Europe mired in the worst economic recession since the great depression, while China's growth continued to soar.

Chinese language a difficult hurdle

The Chinese have a huge talent pool. But they lack diversity, talented people from other cultures and other systems to enrich the mix. The Chinese language is a high hurdle that foreign talents have to cross in order to work in China.

China's historical legacy, culture and tradition

China is an old civilisation of four to five thousand years. The country's history and cultural records show is that when there is a strong centre (Beijing or Nanjing), the country is peaceful and prosperous. When the centre is weak, then the provinces and their counties are run by little warlords. This leads to divisions within China and weakness. This belief is deeply embedded in China's history and culture. No central government will want the country to drift into chaos. Hence, there is unity and uniformity of thought among Chinese elites.

The Chinese know their shortcomings. But can they break free from their own culture? It will mean going against the grain of five thousand years of Chinese history. Where the centre is strong, the country prospers. When the centre is weak, the emperor is far away, the mountains are high, and there are many little emperors in the provinces and counties that go their own way. This is their cultural heritage.

Will China become a democracy?

Can China be a parliamentary democracy? This is a possibility in the villages and small towns. Because it is one way to reduce corruption at these grassroots. The Chinese fear "乱" (chaos) and will always err on the side of caution. This will be a long evolutionary process but it is possible to contemplate such changes. Transportation and communications will become so much faster and cheaper. The Chinese people will be exposed to other systems and cultures and know other societies through travel, through the Internet and through smart phones. One thing is for sure: The present system cannot remain unchanged for the next 50 years.

America's Edge

America's advantage is in its diversity of centres of talent. American centres of scholarship are spread widely and diverse - Eastern Seaboard and the Ivy League colleges, Western Seaboard with their Stanfords and the Berkeleys, in the North Chicago, the South Houston and other centres. The different schools of thoughts contend and, out of that contention, come new ideas, innovations and creations.

Chinese tradition and culture tend to produce a more uniform Mandarinate. But it will change and catch up.

More creative ideas come from America. It is in the nature of two totally different civilisations. America started with waves of immigrants from Western Europe followed by more waves of migrants from other parts of the world. Each wave brings fresh inputs of ideas and energy. China's talent is home grown and ninety percent Han. There has been little or no immigration. Hence, the people tend to be less diverse as in the US.

Conclusion

Although America is currently facing tremendously difficult economic times, I am confident that America's creativity, resilience and innovative spirit will allow it to confront its core problems, overcome them and regain competitiveness. Beyond that, the US should not see China's inexorable ascent as a zero-sum game, but should find a way to work together, which will call for a combination of regular dialogues, hard negotiation and mutual reassurances.