SINGAPORE — In order for Singapore to not become a stooge of any one power, it must work on the basis of what is in its own interest, Prime Minister Lee Hsien Loong said on Friday (June 7) evening.

Mr Lee was answering a question about how smaller nations may act in a world split between the United States and China amid their economic and technological conflict. This was during a fireside chat at the annual Business China awards ceremony held at the Marina Bay Sands.

By acting on its own interests, “there is some chance for us to say that I’m your friend, but I’m also his friend. I’m not (anyone’s) stooge, I represent myself”, Mr Lee said.

But this also hinges on the big powers, too, who must leave room for small countries to befriend more than one side if they do not want to see a world “completely polarised into two camps”, he added.

“That means you don’t force people to take sides, and you don’t say ‘if you are not with me, then you are against me’,” he said in response to the chat's host, Mr Robin Hu, head of sustainability and stewardship at Temasek International, the management arm of state investment firm Temasek Holdings. 

Mr Lee added that this would allow regional and international co-operation to develop in such a way that countries can have strong links with China, Europe, Japan and the United States at the same time.

“Those links will also grow with time. If we have many such links, then I think we can maintain a reasonably balanced position with respect to all the powers. If we only have links in one direction, then I think it is very hard to say that we are friends with everybody.”

Mr Hu later asked what Singapore has done right to forge strong links with China.

In reply, Mr Lee said he does not like to look at what the country has done “right” with China, seeing how things could turn out wrong the next day, to the audience’s laughter.

But Singapore has tried to make sure that its relationship with China is based on “reality and candour”, he added.

“We make sure that we are honest with each other, that we recognise what the situation is and that we don’t make believe and just say nice things to one another,” he said.

'NO MAKE-BELIEVE IN DEALINGS'

Mr Lee pointed out how the late Chinese leader Deng Xiaoping had visited Singapore in 1978 as part of a tour to hear the region’s perspectives about China’s struggle with the Soviet Union.

“He made the pitch to Mr Lee Kuan Yew, (who) said, ‘We understand what you are saying, but everyone in South-east Asia sees China as the threat, because there are (armed communist) insurgency movements in all our countries backed by China’.”

After their meeting, Mr Deng stopped supporting the Voice of Malayan Revolution, which was the Communist Party of Malaya’s radio station.

Mr Lee said there was no make-believe in their dealings: “You want my help, I understand why you need my help and I tell you why it is not possible for me to help you. And from that basis, we assess each other accurately… and we move forward on the basis that your interests align with my fundamental interests.”

Mr Lee said China’s interest is that the city-state sees the bigger power as a developing nation that will benefit the world.

“China sees that we are not against them — we have our own independent position, our own foreign policy, majority-Chinese but multiracial, and we take our position as the Republic of Singapore,” he said.

But while all countries will say they would support the needs and interests of small nations to not pick sides, Mr Lee said actions mean more than words.

“We will have to see. It is in the nature of these assurances — you cannot convey conviction just by a statement. It has to be a consistent pattern of actions over time, and people see that you calculate your interests in this way and they can rely on you, there is a certain predictability, not in what you say but what you believe, and also in the processes in which your leadership is elected and your policies are made.” 

Many countries are currently being pressured and are asked “to speak up on behalf of what each participant thinks is the right thing to say”, Mr Lee said.

But not Singapore, he added. “We have to say what we think is the right thing to say — which is what Singapore is trying to do.”

WILL THE TRADE WAR RESULT IN DIGITAL IRON CURTAINS?

Asked by Mr Hu about whether trade tensions will end up splitting the world into two separate tracks of technologies, hence forming "digital iron curtains", Mr Lee answered that this was a possibility.

Such a scenario happened during the Cold War, he said, noting that the Soviet bloc and the Western countries had their own versions of computers, televisions and airplanes.

“There were two different worlds, and the world was a considerable amount poorer for that division and for that failure to integrate and work together.”

After the Cold War, however, countries shared their technologies. Today, China makes up a quarter of both aircraft manufacturers Airbus and Boeing’s total sales, Mr Lee said.

“If you cut the world into two, you will survive, but it will be very painful… It will hurt both sides... it will be at a high cost,” he said.

If the trade and tech war forces a split, will the world see the emergence of regional pacts as a substitute of the “global multilateral construct”, Mr Hu then asked, noting the presence of former United Nations secretary-general Ban Ki-Moon in the crowd.

Mr Lee said this could also happen.

He said countries will want to make regional schemes, such as the Regional Comprehensive Economic Partnership, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), or to form blocs such as the Association of South-east Asian Nations and the European Union in the absence of multilateralism.

While he hopes that America and China would eventually join the CPTPP, the former needs the political support for it to be possible, while the Chinese side is not ready for it as the treaty’s standards are stringent.

“Hopefully, (these regional schemes) will overlap one another and if we put the patchwork together, overall, it will cover the whole world and there will be no obvious seams or weak points.”

But he warned that these schemes could also end up forming blocs centred around China, America or Europe, for example.

“This would not be a good configuration because tensions will grow and rivalries will grow stronger, and it will lead to friction and trouble.” 

CHINA PREPARING FOR 'ROUGH WEATHER'

Mr Hu then queried about Mr Lee’s take on where China’s economy is headed, as he had recently met with President Xi Jinping and Premier Li Keqiang.

Mr Lee believes China is preparing for rough weather, but the US too, noting how the US has had to subsidise its agriculture industry which was hurting from the tariffs.

“But the money (for the farmers) must come from somewhere. The trade war makes both sides poorer, so you have to make do with less.” 

He noted that the International Monetary Fund had predicted “dark clouds on the horizon”, which will impact confidence and investment, as well as growth and prosperity.

“Singapore’s growth is down this year, maybe not just because of China, but clearly it is doing significantly slower than last year. Our exports are down, compared to last year. We have to know that it is because the external environment is not as favourable now,” he said.