PM Lee speaks to TIME

Two weeks ago, there was a very insightful interview of PM Lee Hsien Loong of Singapore by Ian Bremmer for TIME magazine. You can read it here. PM Lee has couple of positive references to India; explains why Singapore has not opted for Universal Basic Income and refuses to condemn or praise China’s leadership. He says that America abandoning TPP would not enhance its prestige and that PM Abe of Japan had staked a lot to get it done, from the Japanese side.

PM Lee rejects the ‘America on a downhill slope’ hypothesis:

I am very reluctant to say that America is on a downhill slope. You currently have difficulties, both with the economy and the politics, which is very fractious. But it is not to say that the Chinese do not have their own problems or that America does not have a lot of resilience, creative energy and entrepreneurship. You have the science, you have the technology in Silicon Valley and you have the ability to attract brains from all over the world. You can bounce back. On a 15, 20 year view, I do not see any reason to believe that you will continue to go downhill.

He is very correct. But, the sad part is that Americans do not believe it. The crisis has hurt their morale than their economy more. In the final analysis, that is the worst damage that the crisis might have caused America. Look at this remark by Ian Bremmer:

China is responsible for 37 per cent of global growth right now. And certainly, everyone I talk to in the White House understands that if it were not for China after the 2008 financial crisis, we would be in a very different position than we are right now.

Frankly, America held and holds more aces than China does. China could not have afforded to sell down U.S. Treasuries. I had blogged on it here, yesterday. In fact, China panicked after 2008, very badly. Hence, the massive credit stimulus. That is going to hurt them very badly. In a sense, the crisis has extracted its price and it is still extracting. America is psychologically damaged (lower self-esteem) and so is China (more hubris). But, America is less financially vulnerable than immediately after the crisis, whereas China is more so.

Therefore, on balance, China is worse off from the 2008 crisis.

In response to a question whether China is the only option if American pivot to Asia is deemed to have failed, PM Lee gives a very insightful reply:

My question is if it turns out that the United States’ pivot to Asia is seen to have failed in the next five to ten years. Do you think that the only real alternative is that China becomes the dominant player in the region or do you think that we are evolving towards a much more multilateral situation?

It depends on what the Indians do, what the Japanese do. India’s scale is not as massive as China, in terms of their gross domestic product (GDP) or their trade. The Chinese are three times their GDP, but India is growing. Mr. Modi is trying to set the country in the right direction and they will have interests beyond the South Asian subcontinent. They have a complicated relationship with China. There is a border problem and there is rivalry. It depends how they participate in the region. I think their interests will push them to be more active, but we will have to see how that goes. The Japanese, if the Americans begin to look less reliable as a partner, you do not know what they will do. Their Cabinet Secretary has already said in February this year that nuclear weapons are not against their Constitution.

In effect, he says NO; there are alternatives. He hints at the possibility that Japan has the nuclear card and he does not rule out India. Indian leaders should read this Jamil Anderlini piece in FT for starters and makes their moves with ASEAN. China is not importing much from ASEAN these days.

Further, despite the massive economic interaction between China and America – which is different from the cold war era relationship with the Soviet Union, he points out that there is lack of ‘strategic trust’ between the two.

He also believes that China will have to move towards more Federalism more quickly than they have so far and that he sees problems in it while he believes that PM Modi in India is making genuine progress with it in India.

On China’s federalism prospects:

Their society is changing, they need mechanisms that will work with the new generation. Otherwise, if young people become disillusioned, and opt out or become fractious, it is very troublesome. It is a big country, you may think they have full control but actually it is very hard for them to maintain control. Things happen which they do not know about, and they are extremely nervous about it.

His comment on the Internet and the silicon valley types are very interesting and valid. On the latter, pl. read the interview. On the Internet, this is what he said:

It is a tool which you have to use. When the Internet came, people thought it was marvelous. Now, everybody can speak. But the actual result is to the extent that everybody can speak, you get a lot of strange stuff on the Internet. Yet, on the other hand, to a great extent, people go on the Internet to access half a dozen major services. Google, Facebook, news sites, I suppose entertainment, porn. That is about it. It is not as if there a million different masterpieces in a library and you explore a new treasure every day. It did not turn out like that. Human societies are not like that.

In fact, there is a message in it for the techno geeks and techno-optimists. What you envisage and how it turns out, in reality, could be far different, far unpleasant and far short of the ideal.

I repeat: the whole interview is worth reading.


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