Transcript of Speech by PM Lee Hsien Loong at the Economic Club of Washington DC on 23 October 2017

Source: http://www.pmo.gov.sg/newsroom/pm-lee-hsien-loong-economic-club-washington-dc

The last time I was in Washington was in August 2016. Since then, many things have changed in Washington. You have a new administration, with a radically different approach to government and to the world. But the substance of US relations with Asia have not been turned upside down.

US economic interests in Asia are substantial and growing. The Trans-Pacific trade exceeds the Trans-Atlantic trade – it has been for some time and continues so. Your multinationals have major investments in many Asian countries, including Singapore.

Your economic ties are complemented by major strategic and security interests. Major US allies are in Asia — Japan, South Korea, Australia, and the Philippines. You have ties with China, which are the most important bilateral relationship in the world. And the peace and stability of the Asia Pacific is a vital United States national security interest.

Successive administrations, both Republican and Democrat, have developed American relationships with Asia, and strived for stability in the region, and contributed to the stability of the region by your military presence, by your security focus, by your comprehensive diplomacy and economic relationship.

It is the right thing to do because Asia is one of the most dynamic regions in the world economy. The hype about an “Asian Century” has cooled off, but Asian economies are still among the most vibrant in the world – fastest-growing, accounting for two-thirds of global growth today. If you look at Chinese companies today, like Alibaba or Huawei, or Indian companies, like Bharti Enterprises or the Mahindra Group, these are not just big companies, they are world-class multinationals. And there will be more.

Not only are individual Asian economies doing well, but the region as a whole is becoming more integrated and more interdependent. Different parts of Asia are linking up. In Southeast Asia, the ASEAN countries have an ASEAN Economic Community and by 2030, they will be the fourth-largest single market in the world.

ASEAN, together with its Asian regional partners — China, Korea, Japan, India, Australia, and New Zealand — we are forming a Free Trade Agreement (FTA), a Regional Comprehensive Economic Partnership (RCEP), and the key thing is it includes ASEAN, and it will include China and India, and it is a way to bring the countries in Asia closer together and increase the interdependence and the incentive to work together rather than to collide with one another. It will cover half the world’s population and a third of global GDP.

India is making progress with Prime Minister Modi — getting its economy moving, getting its bureaucracy trimmed back, getting its taxes rationalised, bringing in investments and linking up with the rest of the world. It has been less active than the Chinese in developing its external relations, but I think as its economy grows, its incentive to do that will grow. And they have a slogan “Look East”, now it is “Act East”, and we think that is good.

China itself has been vigorously promoting its inter-linkages with the world, particularly with the region, it has the Asian Infrastructure Investment Bank (AIIB), and now they have what they called the Belt and Road Initiative – basically ways in which China can contribute to the regional economy and it can link up itself with its neighbours in a way which is mutually beneficial.

China has been the most important single driver in Asia’s prosperity and integration. The growth rate has slowed but still at six-plus per cent, it is very impressive and it has become the largest trading partner of nearly every Asian country, including nearly all of America’s treaty partners. Whether it is Japan, whether it is Australia, whether it is South Korea, their biggest trading partner is not the US, it is China. You can draw different conclusions from that, you can say therefore why is the US protecting them or you can say, well, why should not the US do more business with them to strengthen the relationship. There are different views and I can tell you that I go with the second view.

Asian countries want to benefit from the trade and economic opportunities that China offers. They welcome China’s initiatives – the AIIB, the Belt and Road – to develop win-win partnerships with its neighbours. They do so because these schemes meet the needs of these Asian countries, urgent needs — for financing, for better infrastructure, and for better connectivity in Asia. Also, from a strategic point of view, these schemes are constructive, stabilising ways to accommodate China’s growing influence in the international system. China is growing, its influence will grow, its desire to have a say in world affairs will grow, and the question is how can this be accommodated. Doing so in a way which brings in its neighbours and benefits its neighbours, I think that is the right approach to go about it. It will still be a difficult transition, but I think that is the most promising approach.

Asian countries will participate in this, but at the same time, they want an open and inclusive regional architecture, and they do not want to see a world divided into rival blocks. Because they have prospered under a global multilateral system of trade and finance, they have substantial economic links with US, with Europe, and they want to maintain and grow these links, even as they deepen cooperation within the Asian region.

The Trans-Pacific Partnership (TPP) was one way to deepen economic cooperation across the Pacific and to achieve a strategic objective, which was to bring the Pacific countries closer together and enhance the chances of stability and security. But because of domestic imperatives, the US decided to withdraw from the TPP. The remaining TPP countries are naturally disappointed, but they are continuing to work among themselves to take the TPP-11 forward.

They also hope that America will continue to maintain and enhance its economic ties with Asian countries in other ways. This is not the time to start major new trade initiatives, but America should still uphold free trade, it should tackle trade issues which arise and they will arise, cooperatively with its partners, and it has to continue to adopt a policy of sustained economic engagement in the region.

Asia has abundant opportunities for US businesses. The investment and technological gaps in Asia as economies grow rapidly are opportunities for American companies to step into. The growing middle classes that purchase innovative and high-quality US products are another growing market. There is great scope for American businesses to grow new markets, to make fresh investments and to create prosperity on both sides of the Pacific.

If you look at iPhones, I think Asia is one of the biggest markets. In Singapore, unlike in many parts of the world, the iPhone is really the dominant player, rather than for a niche upper-end market. Your engines and aeroplanes sell all over Asia – Boeing sells, Pratt & Whitney, and GE. In fact, today Boeing will be signing an agreement with SIA to sell 39 aeroplanes to SIA, and it is one of the things we are doing in the White House when I call on President Trump later on. And those are just two of the things in between, it is not just things but also services, banking, IT services, all in all enormous opportunities for American businesses and enormous boons to American consumers, who benefit from products, from services in Asia, which will make you competitive and improve your quality of life.

The key is the US stance – what do you believe, where do you stand? Do you still believe that you still have the most to gain from an interdependent world, open exchanges and multilateral rules? In particular, how will your relations with China develop? I think they are key questions and how America answers these questions will determine not just the prosperity, but also the war and peace — not just in Asia, but in the world.

Thank you.