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Singapore Prime Minister Lee Backs Trans Pacific Partnership and Stronger U.S. Ties

A Conversation with Lee Hsien Loong

Speakers: Lee Hsien Loong, Singapore Prime Minister, and J. Stapelton Roy, Scholar, Woodrow Wilson International Center for Scholars
June 25, 2014

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ROY: Good afternoon. I'd like to welcome you all to what has been billed as a conversation with the prime minister of Singapore. My name is Stapleton Roy. I'm a retired Foreign Service officer who's now with the Woodrow Wilson Center.

Let me briefly say a word about the prime minister. I've known him for decades now, since I was ambassador in Singapore back in the middle 1980s. Rather than running through a biography much too long to cover in the time we have all allocated for the entire conversation, I would like to simply point out that he represents a model of perhaps how we should be selecting our top leaders.

He began in the military, rose rapidly to the rank of brigadier general, which in Singapore is much closer to the top than a brigadier general is in the U.S. military structure. He was elected to parliament in 1984, served 20 years in parliament before becoming prime minister. During that period, he held -- he was finance minister. He's minister of trade and industry. He was deputy prime minister for 14 years. And now he has been the prime minister of Singapore for 10 years.

LEE: Nearly.

ROY: Nearly 10 years. A remarkable record, a remarkable experience to take into the top office in Singapore. Mr. Prime Minister, we're very happy to have you here, and I wonder if you would like to lead off by framing the conversation, if you will, in whatever way you choose.

LEE: Well, thank you, Stape.

ROY: We are on the record, incidentally.

LEE: Well, I'm in Washington this time for three reasons. The first reason is it's the 10th anniversary of the U.S.-Singapore free trade agreement, which was begun with Bill Clinton, finished with George W. Bush, and has served both countries well for the last 10 years, not just in its direct benefits to America and Singapore, but also in its indirect effects in the broader relationship between Singapore and America, which extends to security, anti-terrorism, education, cultural cooperation, and all sorts of fields, but also America's broader relationship with our region, because it is a signal that it is advantageous and sensible to deepen ties with the U.S., economic ties, and perhaps it makes sense for other countries also to think about this.

And it has led to other deals which the U.S. has had with Asia, with ASEAN, with Korea. I wouldn't take credit for all the good things which have happened, but this was a signal early in the process. So that's a first reason.

The second reason I'm here is because we are in the midst of and hopefully towards the end of negotiating the TPP, the Trans-Pacific Partnership. It's another seed which we planted in Singapore some quite long time ago with a few other small economies in the Asia Pacific. Singapore got together with Brunei, with New Zealand, and with Chile, and we formed what we call the P4 free trade agreement.

Our trade was not very significant, but we saw this as a nucleus on which we could grow a tree. And we hoped that in time other countries would come and join in and participate in this and we would be able to develop towards an Asia Pacific free trade scheme of some kind which would be significant.

And the TPP is the offshoot of this P4, which we planted. You probably know about it. America's part of it. So are your NAFTA partners. So is Japan and Australia, Singapore, Vietnam, Malaysia, and a couple of others. And it is very consequential, consequential because it accounts for 40 percent of the world GDP, consequential also because as a signal of America's commitment and seriousness as an Asia Pacific power which it has always been and determined always to remain, and it's almost been completed.

I think there are some small issues only to do with rice and vegetables, rice and beef, or something like that, with the Japanese. We've more or less settled our issues, and so have most of the other countries. And it awaits just the last step to being completed and then the crucial steps to be ratified after being completed. And that depends on your electoral timetable and pleasure of Congress, and we hope that there would be support to ratify that, because it is important to the U.S. economically, as well as strategically.

And I say strategically because there's a third reason I'm here. The president has talked about rebalancing towards Asia and the importance of Asia to America. And we strongly support that. And we understand that for that to be meaningful and to have substance, it cannot just be just -- it cannot just be just talk. It cannot even just be security which is important, but it has to be a broad engagement of the region, and you have to have policies, measures, specific projects which we'll work with the partners in the region where it's win-win and people say, yes, America is a good and worthy friend and I'm on your side. And the TPP is one serious measure which shows the seriousness of your purpose.

The region is changing. China is growing, developing, becoming more influential and will become more so by the day. There are many opportunities in the region. There are also tensions and complexities in the region between China and Japan, between Japan and Korea. Within Southeast Asia, each country has its own political dynamic. Between China and Southeast Asia, we want to be good friends, and we are good friends. We also have issues, like the South China Sea disputes, which involve several of the ASEAN countries and, in a sense, ASEAN as a whole.

So it's a region where things are moving and which America is part of and has to engage in actively. And you have many other issues in your agenda. Iraq preoccupies you. So does Iran, so does Syria, so does Eastern Europe and Ukraine. But we hope amidst all that busy platter, you remember at least once a day that in Asia you have many friends, many interests, and many investments, and it's in many countries, and we wish you well, and we hope to deepen that relationship.

ROY: Prime Minister, let me pick up on some themes in your remarks. There's a lot of worry about the relationship between the United States and China. And both countries have agreed to try to create this new type of major power relationship that can stabilize, contain, and hopefully reverse the growing strategic rivalry between the two.

"The president has talked about rebalancing towards Asia and the importance of Asia to America. And we strongly support that."

But at the same time -- and we have TPP and other positive developments that are trying to retain an open Asia. But you referred to these tensions in Asia, and if you compare the current situation to the situation in Asia 10 years ago, it's easy to see that 10 years ago the overwhelming aspect of the trends was positive -- the Declaration on the Conduct of Parties, the China-ASEAN strategic partnership, China and the Philippines were planning a state visit by the Chinese president to the Philippines, trade between Japan and China was rising, and China soon became the top trading partner of Japan, and we were in the six-party talks with North Korea and a year later we were able to reach the September 19th joint statement in which North Korea committed itself to ending its nuclear programs and rejoining the Non-Proliferation Treaty.

And now, as you mentioned, we have these severe tensions between China and Japan, between China and South Korea...

LEE: Oh, not between China and South Korea.

ROY: Excuse me. Between -- no, thank you for the correction -- between Japan and South Korea. No, actually South Korean relations with China...

LEE: Are very good.

ROY: ... are very good at the moment. I was just recently in South Korea and saw this firsthand. We have the disputes in the South China Sea. In other words, great power rivalry factors are becoming much more important in East Asia than at least on the surface appeared to be the case 10 years ago.

Singapore's a small country that hits way above its weight in the international community, but which nevertheless has to be vulnerable to negative trends in the region. What is your sense as to what prospects are for reversing these negative trends and getting Asia back on an overwhelmingly positive movement?

LEE: I think if you compare where we are today with 10 years ago, it's not just the negative trends which have become stronger, but the positive trends also. It's both. What's happened is the participants have become stronger. Their interactions have become more intense. And when you're managing intense interactions, it has great benefits, but also great complexity.

So the trade volumes between China and ASEAN or China and Japan is much huger now than it was 10 years ago. The people movements -- I mean, tourism, students, businesspeople moving, their volumes are much greater than before. Even transpacific between America and China, your trade, your investments, your degree of interconnectedness is much greater than before.

But at the same time, because the countries have become stronger and interactions are more, you have more friction points which emerge. The Senkaku or Diaoyu Islands are one, which have been there between China and Japan, and that's heated up in the last couple of years. The South China Sea is an issue between China and several of the Southeast Asian countries, and that has also significantly heated up over the last couple of years.

I would say that none of the Southeast Asian countries want to have a fight with China. In fact, China, too, goes considerably out of its way to develop friendly relations with ASEAN. And we have very thoughtful, comprehensive, committed plans to do that.

But there is this issue of the territorial and the maritime disputes, and it is not easy to resolve because of another factor which has changed in 10 years, and that is that nationalism has become a stronger sentiment and a stronger factor in influencing government. Certainly you see that in the present Japanese government's approach towards normalizing the country and which is a deeply felt overriding objective of Mr. Abe, and certainly that's true in China, too, not just among the intelligentsia, but even amongst the population that China has hosted the Olympics, China has become successful, are standing up again, we will take our place in the sun.

And in these circumstances, when you come into contact over islands and waters, it becomes difficult to resolve. I think the correct answer from America's point of view, I don't think America uses the term a new model of great power relations. The Chinese say that. The Americans just say a new model of U.S.-China relations, which is, I think, a more reassuring term to non-great powers.

"I would say that none of the Southeast Asian countries want to have a fight with China."

And the right approach to that is not to pull back, neither to be just lovey-dovey, but to engage constructively, but at the same understand where your vital interests are and be quietly firm where vital interests are involved. And I think that's what the Chinese are doing, and I'm sure they expect the Americans to do no less.

ROY: When we look to the future, we not only worry about the role that China will play in East Asia. We worry about the quality of the U.S.-China relationship. But we also worry about China itself. China has been growing very rapidly. Its growth has been good for the region. But it's also giving, on the one hand, China capabilities in the military sphere it didn't have before, and it's creating problems within China, disparities in the distribution of wealth, social changes that are inherently destabilizing.

Two years ago, you've visited the Central Party School of the Chinese Communist Party and gave what I thought was an extraordinarily thoughtful speech in which you both looked at developments in China and at regional issues. And I was struck by one phrase in your speech, where you said that China needed to upgrade its economy to continue improving people's lives. It has to restructure from an export-led economy to a more sustainable demand-driven one. It must prepare for a rapidly aging population, strengthen social safety nets, and address rising income inequality. It must also undertake political reforms to meet rising public expectations for accountability, while maintaining social order and stability.

Now, what struck me when I re-read your speech was that if you compare this to the bold program of reforms that were announced at the Third Plenum of the 18th Central Committee last November, it looks as though China actually, for its own reasons, is, indeed, trying to address a lot of these types of issues. And if they do so successfully, it could provide a base for successful continued rapid growth, but if they stumble in the process, it then raises the problem of instability in China as a long-term regional concern.

I wonder if you could comment. Do you think that China is, in fact, trying to do the sorts of things that inspired your thinking on the subject?

LEE: Yes, I think they are trying to do that. They have seen rapid growth. They have seen the problems which this growth has generated, inequalities, pollution, social tensions. Of course, they've benefited from the resources which growth has provided them and quality of life, in standard of living, in influence, in terms of their defense capabilities.

But they know that they have to address the problems which have arisen, and it is not just a matter of economic policy. It's also what they have now called social management, which means, how do I maintain how many within society, within the society? And it also has to address how the political system is going to work. They're not going to have primaries like you do for very, very, very long time to come, but they know that they've got to find some way to engage the population which can follow what is happening and will increasingly want to have some kind of a say.

Deng Xiaoping used to say you cross the river one stone at a time. But if you look at these three problems, the economic part -- I think crossing the river is less of a difficult challenge, because they are models for economic development, for how you're going to transform your workforce, your industry, your productivity. World Bank has ideas, so many academics who have studied in so many countries. There are very few models for transforming a society like China. There are even fewer models for designing a political system which will work for society which is changing in the way China's is changing, on that scale, with that history and culture and that need for stability, but also openness and the opportunity for different voices to be expressed.

They know this. They have taken the task very seriously. I think before their Third Plenum this year they spent a long time consulting internally before they came up with this document, which was finally adopted, so they know what needs to be done.

And Xi Jinping I think has personally engaged, chairing many of the leading small groups himself, in order to bring the pieces together. He can't do it all himself, but his commitment will make a big difference to get moving a huge system which inherently has a lot of inertia. And so we have to wish them well.

From an outsider's point of view, what the Chinese do domestically and succeed, that is good, but what is most important is that as China grows in its influence in the world, it is able to fit into the world and into the world order in a peaceful and a non-disruptive way, with its interests accommodated and yet welcomed by other countries as a constructive player with something to contribute, the way the U.S. has been in the Asia Pacific for 70 years, since the war, or 60-plus years since the war. And if the Chinese can emulate you in that respect, I think it will be a great achievement.

ROY: Let's turn to Southeast Asia, a region that you are intimately familiar with. The collective growth rate of Southeast Asia continues to be among the highest in the world. But there are problem areas in Southeast Asia. We have the fact that only 4 of the 10 members have territorial disputes with China. We have political instability in Thailand, severe political instability. We have upcoming presidential elections in Indonesia, and Indonesia is the big heavyweight in Southeast Asia. Are the trends in Southeast Asia moving in the right directions? How confident should outsider observers be that ASEAN will be able to retain the degree of solidarity that it has surprised the world by displaying over the last several decades?

LEE: We are not single United States of ASEAN. We're not even the European Union. We are 10 independent countries making common cause on issues which affect sometimes all of us, sometimes many of us. And we know that if we want to be relevant in a regional architecture, then speaking together makes a lot more sense than speaking separately.

I think that there will always be differences in strategic perspectives and postures of the different countries. It must be different if you are Laos, landlocked and adjacent to China, as opposed to Indonesia, an archipelagic state with 230 million people and a significant regional power. Your perspective will be different; your stance will be different. And so ASEAN will not have one foreign policy or one defense policy, but we hope that we will have enough consensus that when something happens in our region, which because it is in our neighborhood affects the tone for the whole neighborhood, we can take a stand and have a coherent and a substantive view, as we are trying to do over the South China Sea.

Not all ASEAN countries are involved with disputes. We don't all have to have a dispute in order to make common cause. We don't take possessions on the individual territorial claims, because, in fact, some of them are between ASEAN countries, and you can't say who is right and who is wrong, but that you must deal with this in accordance with international law, including the Convention on the Law of the Sea, that you must deal with it peacefully and with moderation, and that we need a code of conduct so that you don't have accidents at sea and escalation and unnecessary conflict, an unintended conflict. I think these are things which ASEAN has a view on and which ASEAN has expressed a view on, and I think that's constructive.

ROY: You picked me up on my misstatement to correctly note that South Korea and China have very good relations at the moment. At a time when the two very important U.S. allies in Northeast Asia, in Japan and South Korea are not getting along well together for a variety of reasons. But we also have the Sino-Russian relationship, which because partly of events in Europe seems to have been propelled to an even higher level of cooperation through the conclusion of this long-term gas supply agreement that was hammered out a month ago.

LEE: In Shanghai.

ROY: That's right. Should the United States be concerned when South Korean relations with China significantly improved from the low point of the three years ago at the time of the Cheonan ship incident? Should we be concerned about good relations between Russia and China? Will this impact on East Asia in a way that is likely to be detrimental to security interests in the region?

LEE: Well, first, I think you should be concerned that your treaty partners have good friends in the region, because if your treaty partners are at odds with others in the region, that's -- you're their partner and there are implications for you. South Korea is a treaty partner. Japan is a very important treaty partner. And I think that one of the reasons why South Korea is getting along well with China is because it's having some difficulties with Japan.

And one of the reasons Japan's difficulties are with not just China, but also South Korea is because of the reopening of the issues which go back to the Second World War and before, and which have never been properly put to rest the way they were put to rest in Europe after the Second World War.

So it's really a sovereign choice for the Japanese to make, but as a partner of the Japanese, which wishes it well, I'm sure that you will express the hope, as I think Vice President Biden has, that Japan will act cautiously and circumspectly and will try to develop its relations with its near neighborhood, China and Korea. They can't do it themselves. It takes two hands to clap, so you need the Chinese, as well, and the Koreans to be part of it.

But unless you can put the Second World War behind you and not keep on reopening issues of comfort women, of aggression, of whether or not bad things were done during the war, I think that this is going to be a continuing sore.

Between China and Russia, this is an old play. When the Soviet Union had difficulties with America, America made friends with China. Now that America has difficulties with Russia, the Chinese, they will make friends with Russia, and they have -- Chinese have some issues with you, but they will make friends with Russia. So this is par for the course.

But the Russians are 200 million or less, shrinking. And they cannot substitute for what America brings in terms of markets, technology, investments. For that matter, they don't supply as many U.S. Treasury bills. And I think the Chinese know that, so I don't believe the Chinese will want to rupture their relations with you at all. They will want good relations with you, but they will expect -- they will approach it in a muscular way, and I imagine so will the United States.

ROY: We have about 30 minutes left. I'd like to turn to the audience. I have 10,000 more questions that I could ask myself, but I think that we would probably get a greater variety of issues if we give the audience a chance to ask some questions.

I would like to remind everybody that, one, we are on the record. Please wait for the microphone and speak directly into it. Please stand, state your name and affiliation before asking your question, and please keep questions and comments brief. We have a lot of people in the room, and we would like to give everybody a chance to ask their questions.

With those ground rules, the floor is open.

QUESTION: Thank you, Prime Minister. My name is (inaudible) with Chinese Review News Agency of Hong Kong. Singapore was playing a very positive role in facilitating or even mediating the cross-strait relations in the past. How do you see the current situation of the cross-strait relations? Is Singapore continue to be willing to play a positive role in promoting the political dialogue of the cross-strait political dialogue, such as Xi Jinping and Ma Ying-jeou's meeting? Thank you.

LEE: Well, we -- like many other countries in the world -- have an interest in having stable relations across the straits, between the mainland and Taiwan. We do what we can to help, but we are not the mediator. You can have the United States mediating between the Arabs and the Israelis. Singapore is not in the position of the U.S.

What we have done is to be helpful to both sides, and when the two sides wanted to have a dialogue between Koo Chen-fu and Wang Daohan, back in I think '92 or '93, we provided the venue. So the Wang-Koo talks which came up with one country, two systems, to each -- no, one China, to each his own interpretation...

ROY: Yes.

LEE: (speaking foreign language) We were the host for that meeting and that declaration, not more. The Chinese have made quite clear that this is a family matter and we are not family. We may be distant relatives, but we are not family.

(LAUGHTER)

So we understand that. But I do not know what -- there are now, of course, much -- many more contacts directly between China and Taiwan, so it's entirely up to them how they find us useful, and if they do, we'll be happy to oblige and do what we can.

ROY: Yes?

QUESTION: Edith Brown Weiss, Georgetown Law School. Mr. Prime Minister, what do you see as the two or three biggest challenges in Singapore within the next decade? And any thoughts on how you intend to address them?

LEE: Well, one big challenge is demography, demography because we are not producing babies to reproduce ourselves. An average woman produces 1.2 babies, and that's not enough to replace her and her spouse in the next generation. Anyway, extrapolate that to the middle of the century and beyond, you can calculate how we're going to decline.

That is a very big problem for us, as it is for many developed societies. In fact, it is a problem for every East Asian society and especially city. You will compare us with Hong Kong, with Shanghai, with Korea or with Japan, we all face the same problem. None of us have found a good solution.

We have -- we are doing what we can with baby incentives, with tax incentives, with childcare facilities. We're also topping up our population with immigration, but you can't go too far, because there has to be -- I mean, it has to be essentially a Singaporean country and the next generation must be mostly born in Singapore, not necessarily all, but mostly. And so there has to be a balance, but how do we get more couples to marry earlier and to have a few more babies? That's one very big challenge.

I think another very big challenge for us is that we are a city and yet we are a nation. If you are New York, while you are a city, there is the United States. You belong in the United States. You can rev the engines and go ahead and you can bring in people from all over the world and you become one of the leading cities in the world, in terms of talent, in terms of entertainment, in terms of financial services, in terms of buzz.

Now, if we are going to prosper, we must be one of the leading cities in the world, because otherwise there are any number of cities in Asia which have 3 million population or even 5 million population. What makes us stand out? That in Singapore, talent can come, talent wants to come, and our own talent has every opportunity to develop, to grow, and to become outstanding, and to be able to contribute beyond just in Singapore, in the region to do business or overseas, internationally, to have a diaspora, and to have that identity that Singapore is a place which is special and where the human spirit flourishes.

How to do that and yet preserve the Singaporeaness of this country where people do national service, they serve the nation, they identify themselves as Singaporeans. You can be comfortable anywhere in the world. Washington, D.C., is quite a nice place to be, but I'm going home to Singapore.

Now, that is a challenge which is going to be with us for longer than the next 10 years. We speak English. We are educated, fully into the -- plugged into the global system. Our people are comfortable wherever they go, and they go many places, and we want them to go, but we also what them to know where home is. Now, that we have to work hard to maintain.

"What makes us stand out? That in Singapore, talent can come, talent wants to come, and our own talent has every opportunity to develop, to grow, and to become outstanding, and to be able to contribute beyond just in Singapore."

ROY: Last winter here in Washington, the thought of going to Singapore was constantly on my mind.

(LAUGHTER)

In the rear there?

QUESTION: Prime Minister, just...

ROY: Please identify yourself.

QUESTION: Yeah (inaudible) from Voice of America. Prime Minister, just now when talking about the South China Sea issue, you talked about international law, that ASEAN is for the international law to solve dispute. And we know that China has declared that international law does not apply here. So how do you look at the tension?

LEE: I don't think China has quite said that international law does not apply to this. I think what they have said is they have claims which existed long before international law came into existence, and these have to be given due weight, because international law does not go back to things which preceded it.

Now, that's -- I'm not a lawyer, so I presume there is some plausibility in that argument. But from the point of view of a country which must make -- must survive in an international system where there are big countries and small, and outcomes cannot be determined just by might is right, I think international law must have a big weight in how disputes are resolved.

And if you are a big country, well, you bend the rules. The U.S. is a big country, so you -- there is international law, but you have not ratified UNCLOS. You have not subscribed to the International Criminal Court. And there are other occasions when if things go against you in WTO, there are a lot of people who say, why do I have to follow this?

But because the U.S. generally follows international law and people see the U.S. as a country which is rule-abiding and law-abiding and not just a country which is on top because might is right, therefore the U.S. enjoys respect and even affection.

And people accept and welcome you around the world. And if China can reach that position, I think it will have made a great achievement. It's, of course, up to each country to choose how you're going to do this, and great powers have their own logic and their own calculus, and nobody can say how it will develop. But I know that the Chinese have seen other great powers which have tried to rise by might, and they have cited the examples of the Spanish and the Portuguese and the German Reich and the Soviet Union and the British empire, and they have said all those have come, risen and fallen. And they are trying not to make the same mistake. And I wish them every success in avoiding it.

ROY: Over here?

QUESTION: Thank you, Mr. Prime Minister. My name is Roland Amore. I'm with Oppenheimer. The emergence of Shanghai as a financial center has expanded the Asian financial centers from Hong Kong, Singapore, and Shanghai, which has the potential to grow quite rapidly and quite large. What are the economic impacts of that?

And let me carry it one step forward. What China needs economically to be the superpower is either their currency is a -- as a reserve currency in the world or some third-party basket of commodities and so forth. How do you see that dynamic playing with the growth in the expansion in the Shanghai markets? And what will happen to Hong Kong and Singapore in their relative standing?

LEE: Well, you look at -- I have no doubt that Shanghai will become a great financial center. It's already a very important financial center because China is a very important economy, and Shanghai is the financial center where the banks are, the institutions are. I am sure all the consultants and all the law firms will come.

Whether it can go beyond that and become a financial center for the region, that's not so easy to predict. You look at Tokyo. Economy is the second-biggest in the world, or third, depends how you count it. It's got big banks, insurance institutions. But it's not the regional hub of financial services in Asia. It's very domestic-focused, and if you're looking for regional business, you go to Hong Kong, you may go to Singapore, you may go to Sydney.

There's a different ethos, different culture, different connectedness, and so each of us, we have our own niche and we prospect together. Some rivalry and competition in a friendly way, but there's -- Asia Pacific is big enough for all of us. And I think it's big enough for Shanghai, as well.

Shanghai, of course, can become more open than Tokyo. They speak Chinese, but they are very welcoming to international talent and management coming and staying, and it's a very livable environment. The skies may be a bit gray, but the culture, the history, it's a good city to live in. And I think that's a factor which will be relevant to developing a financial sector.

The renminbi and its international role, I think that's something which the Chinese have been thinking hard about. They are taking some steps in that direction. They have allowed more international use of the renminbi. They're having clearance banks in London, in Singapore, in Hong Kong. I'm sure they've done it in New York, as well. I don't have specific latest.

But to go from being a national currency to an international one, which others want to hold and settle, you need free capital movement. The Chinese don't have that. You need to have a completely reliable domestic political and legal system which the Chinese will be developing. You need to have the financial markets where you can trade and maybe every millisecond -- I don't think the Chinese are ready for that.

You need to have several trillion dollars of paper circulating and the assets which people can invest in, trade in, the liquidity. I think it's a long way. And if you look at the euro, which has many more of these preconditions, they have not become the currency of choice for international trade. I mean, there is some settlement in euro. There are some balances of reserves which are held in euro. But the U.S. dollar is still the preeminent currency. We worry about that, because if something goes wrong with the U.S., well, then the whole financial system will go wrong worldwide. But if something goes wrong with the U.S., I think many things will go wrong worldwide.

ROY: Over here.

QUESTION: Good afternoon, Prime Minister. My name is Douglas Paal from the Carnegie Endowment. In the United States and elsewhere, there are a lot of complaints about Chinese cyber theft of intellectual property. And, of course, in lots of parts of the world, a lot of complaints post the Snowden revelations.

Do you have some ideas of how we might approach more constructively the big gap between the U.S. and China and other countries on how to manage the cyber sphere?

LEE: I'm not sure what the gap is. I think after post-Snowden, people think that every country does what every country needs to do. And you could make a distinction between cyber intrusions for commercial purposes and cyber intrusions for national security purposes, of which the second is OK but the first is not, but I think in practice you will find that quite difficult to operationalize.

I think that the only solution to this is to put up your guard and assume that these are things which many countries do. And the Chinese may be smarter at it than others and may do more of it than others, and if they are in flagrante in court, well, if it's politic, you expose it, and if they can't stand the embarrassment, they will have to change.

After Mr. Snowden, who did America an enormous amount of harm, even though you actually didn't do any bad things, you have felt constrained to change some of your operating norms. And you are a different kind of society, but in international -- on the international arena, I think what other people think of you does count for something, however big and powerful you may be, and that applies to China, as well as to the U.S.

QUESTION: Thank you, Mr. Prime Minister. I'm Bill Nash (ph), a retired soldier, also. I'd like to shift the conversation if we could to democracy and human rights. And I would ask you for a brief survey of your views of those two items developing in Southeast Asia, and as you do your survey, would you make sure you stop in Thailand, Cambodia, and Indonesia?

(LAUGHTER)

LEE: I don't think I will get visas to all these countries...

(LAUGHTER)

(CROSSTALK)

LEE: I think different countries have different perspectives. America, with your history, with the Declaration of Independence, the Bill of Rights, you put these high up on your scale of values. In Southeast Asia, the countries do value human freedoms and welfare, but they also have other priorities and political imperatives. And if you look at the way the countries are developing, whether it's Vietnam, whether it's Indonesia, whether for that matter it's Myanmar, I think people realize that if you have -- if you run a regime which does not further welfare of your people and does not enjoy the support of your people, whether by elections or not, you're on a dead end.

The Vietnamese may not have elections like you do, but they are very sensitive to ground pressures. And when an issue comes up, they have demonstrations and -- and objections which they find not so easy to put down, objections not just to foreign issues like their dispute with China, but domestic issues like corruption, and they have to respond to that.

In Myanmar -- you call it Burma -- the previous military regime changed, partly maybe you pressured them from externally, but I think substantially also because the generals themselves knew that where they were, they were headed into a dead end. There was no future. The people knew there was no future and hated the status quo. They had to change. And so they're onto a new path, which is going to be a very difficult one, because when you go into democracy, new demons are let loose.

Suddenly you now have Buddhist populists fighting Muslims, not just Rohingya in Rakhine state, but Muslims in the body of Myanmar, and you -- even Aung San Suu Kyi, who is a saintly person, cannot easily stand up and say, "This is wrong," because then you will antagonize 95 percent of the population or more who are Buddhists. So it's going to be a difficult path for them.

If you look at Indonesia, they went from the Suharto new order regime to one where elections are held. They've had quite a number of changes of presidency since Suharto and quite a range of individuals and governing styles as president. The last 10 years have been stable, because with President Yudhoyono, he's brought in -- he brought in a technocratic team and a measure of stability and predictability and restraint which enable Southeast Asia to be stable and not to be shaken by problems within Indonesia. And I think that has been good for the population for Indonesia, and we are grateful for that, and we hope that with this election now underway and polls going to be held on the 9th of July, the next Indonesian president will continue the good work.

So I would look at democracy and human rights like that. What does it deliver for the welfare of the people, for the stability of the country, for the opportunities for the next generation of the population? And if you can deliver that, well, that's more important than the forms and the -- and the precise way the rules are expressed.

ROY: Back in the rear?

QUESTION: Thank you, Prime Minister. My name is Cheng Ho (ph). I'm from China's Haishi Media (ph). So China has really learned a great lesson from Singapore's economic openness and the way Singapore integrates its economy into a global economy, and Chinese scholars and public intellectuals are also trying to draw lessons from Singapore's political system. So what do you think is the right conclusion to draw, to draw from -- in Singapore's experience the evolution of Singapore's political system from your father, Minister Mentor Lee Kuan Yew's, era to your -- to what you are trying to do with Singapore's political system right now. What do you think is the right conclusion to draw for China? Thank you.

LEE: I think for China, they are not looking to us to solve their problems. They're looking to us as one interesting model. I describe it as a banzai. We are a small tree. They are an enormous fraction of a continent, and they're saying, "This is very interesting. Now what can I pick up from here?"

(LAUGHTER)

It's a laboratory model. From my point of view, the laboratory model is our life. It has to work. From their point of view, well, it's one idea which you can see what you can pick up and how you're going to apply it.

And I think they found our model useful, because we are Asian, majority Chinese, not completely Chinese in our culture anymore, because we have a significant non-Chinese minority population, also because we have been colonized by the British 150 years and we work in English, when we are plugged into the Western world and Western norms. And they would like to understand how you can make the system work which is clean, which is stable, and which has elections. And people accept this, and people feel that this is their country.

So on that basis, I think we tell them, if you find us interesting, please, by all means, come and take a look, but we're not holding ourselves out to you or to anybody else as a city on a hill. From our own point of view, the conclusion is you never solve any problem permanently. We've solved many problems coming where we are in the last 50 years, becoming a nation, developing the economy, entering the first world, at least in standard of living, education, defense, so many specific issues which we had to overcome and make successes of in order to be a successful country.

But as you solve one problem, new issues arise. It's in the nature of human societies. So we are at this level, well, we now have new problems. I talked about the problems of demography, having enough babies, about a national identity. You have issues of inequality, like in every developed country. We have concern about wages not moving up enough, concern about social solidarity, a concern about how we're going to make our living in the world, a world which is not tolerant of failure, and we're a small country, if you turn turtle, you don't turn back up again.

And that's something which we have paramount in our minds and which a subcontinent or a continent like the U.S. or China, you can treat with a great deal more equanimity. And, well, we accept that you are in a more comfortable position, but please understand, I'm in a small boat.

(LAUGHTER)

ROY: Yes?

QUESTION: Thank you, Prime Minister. My name's Alex. I'm with United Daily News in Taiwan. My question, this is about TPP, because you mentioned that one of the reason you're here is about TPP. I wonder how soon will you expect the TPP will be concluded? And Singapore and Taiwan signed FTA last year, and Taiwan has expressed its willingness to join TPP. I don't know, what is your viewpoint about Taiwan's participation in TPP? Thank you.

LEE: Well, I think it will depend on China. I mean, it will depend on the other countries in the TPP group, whether you -- they will want to bring in Taiwan as a new partner. So far, these have all been APEC economies. Taiwan is, too, but these have all been countries. I think before -- when you join a trade negotiation, it's never purely an economic calculation. It's also a political one, so the other countries will -- must be quite convinced that this is a step which will not impair their relations with any third party. And so I think it will take some time. It's not something which is completely ruled out.

I think for that matter, even China is looking at the TPP carefully. They are not members. They have -- they started off -- disdainful is perhaps not quite the right word, but clearly not intending to participate. But now I think they're looking at it carefully and they will study the matter. And if the terms are right and the politics is right, I can imagine that the TPP could be one way in which one day the U.S. could have some arrangement with China more easily than if the U.S. directly had an arrangement with China.

And whether that will make possible other developments, other participants or Taiwan, well, that's very difficult to say now. But never say never.

ROY: Back in the rear there?

QUESTION: Amy Wilkinson with the Harvard Kennedy School. My question is, given that Singapore is such an economic hub in the region, how do you think about attracting entrepreneurs, entrepreneurial talent or venture capitalists that would invest in the next technologies?

LEE: We try to do that in different ways, first by attracting talent, per se, because we think that if you are going to prosper, you must be a magnet for talent, in terms of opportunities, in terms of the ethos of the society, in terms of the quality of life, in terms of the ease of doing business and getting new things started.

We have specific schemes which try to incubate new companies, where venture -- where venture firms can get started and venture capitalists can come and you can have an ecosystem of -- what do you call them -- not godfathers...

QUESTION: Angel investors.

LEE: Angel investors. Hedge funds, angel investors. All the whole range of people who invest in the tech and IT -- venture arena. We've had modest success, and some of our companies have been -- have been bought up out onto Silicon Valley and done quite well. And I hope there will be more.

But the challenge is that you need to bring in a sufficient constellation of entrepreneurial talent, and you also need that base market, which in Silicon Valley you have the whole of the U.S. In Singapore, it's a smaller market, so you have to start up in Singapore and be able to project beyond that into the region and maybe even into the U.S. And some will do, and we hope more will do.

QUESTION: Prime Minister, we've just about run out of time, but I was very struck in your Central Party School speech by a sentence in which you noted that of the eight ethnic Chinese who have won Nobel Prizes in science, all were either American citizens or became American citizens. My question is, is China catching up in this area? In other words, is China developing a scientific community and a spirit of innovation that will alter that picture so that ethnic Chinese who are Chinese citizens may be able to win Nobel Prizes in science in the future?

LEE: I think they are trying. I do not know how far they have gone or how successful they have been. I think the universities have very high-quality people. If you can get into Beijing University, it's harder than getting into Harvard or Stanford or Yale. But to have that openness, not necessarily political openness, but even academic openness, and not to have a hierarchical structure within the system where the professor is the boss and everybody else takes his turn, that's something which is not easy to replicate.

The Japanese have had modest success. They've had a couple of Nobel Prize winners. The Chinese have not yet. I think they will try very hard to do that. I made that point in the Party School because there is a perception in some quarters in China that America is a country in decline. I mean, you've run in trouble in the global financial crisis. It shows some moral weakness and decay in the system. And that's the past.

And I wanted them to realize that this was not so and America is not to be written off and there's a lot of energy and resilience and talent which they are able to make use of, which China is trying to do but has not done to that same extent yet.

I think they heard me. I'm not sure they fully appreciated the message. But I meant them well.

ROY: Do you think that, as prime minister of Singapore, that China or Singapore will be the first to have a team in the World Cup?

(LAUGHTER)

LEE: I will take my bets 10 years from now.

(LAUGHTER)

ROY: Prime Minister, thank you very much. Thank all of you.

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