SINGAPORE: While the “fundamental problem” between the US and China is a mutual lack of strategic trust that bodes ill for compromise or peaceful accommodation, a face-off between the two countries is not a “strategic inevitability”, said Prime Minister Lee Hsien Loong.
“To go down the present path would be a serious mistake on both sides,” he said.
Mr Lee was speaking at the opening of this year’s Shangri-La Dialogue on Friday (May 31), which comes amid US-China tensions on the maritime, trade and technological fronts.
Both Acting US Secretary of Defense Patrick Shanahan and Chinese Minister of National Defense Wei Fenghe will be giving speeches at the dialogue.
Mr Lee said both sides were “sensitive about being perceived (as) weak”, pointing out that the US wants to show it has come out ahead in any deal, while China, because of its long history with the West, cannot afford to show it is succumbing to Western pressure to accept an “unequal” treaty.
“This zero-sum dynamic makes it very hard to construct an agreement that is politically acceptable to both parties,” he said.
“Ultimately it is in the interests of both the US and China to reach such an accommodation, and to persuade their domestic publics to accept it.
“They both need to keep their relationship steady, so that both can focus on their respective pressing domestic priorities, and not be distracted by troubled relations with the other.”
And if indeed there is a conflict between the US and China, where would it end, asked Mr Lee.
Pointing to the Cold War, which ended in the “total collapse” of the planned economies of the Soviet Union and the Eastern European countries, Mr Lee said it was “highly improbable” that China’s vigorous economy would collapse in the same way.
“China cannot take down the US either,” he stated. “The US is still by far the strongest country in the world. Its economy remains the most innovative and powerful, and its military capabilities far exceed anyone else’s.”
Mr Lee acknowledged that while China might be abreast or even ahead of the US in some fields, it would be “many years” before China could equal the US.
“And contrary to what some people in China think, the US is not a declining power, nor is it withdrawing from the world,” he added.
“In fact, the US has made clear its intention to compete robustly, though in a different mode than before.”
Mr Lee concluded that there was “no strategic inevitability” about a US-China face-off. “But at the same time, if such a face-off does happen, it will be nothing like the Cold War.”
Even if things fall short of an outright conflict, Mr Lee said a prolonged period of tension and uncertainty would be “extremely damaging”.
“Many serious international problems like the Korean situation, nuclear non-proliferation, and climate change cannot be tackled without the full participation of the US and China, together with other countries,” he said.
“In economic terms the loss will be not just a percentage point or two of world GDP, but the huge benefits of globalised markets and production chains, and the sharing of knowledge and breakthroughs that enable all countries to progress faster together.”
Therefore, Mr Lee stressed that the “utmost” must be done to avoid going down the path of conflict, and causing enmity on both sides that would last for generations.
“Of course, it is the duty of security and defence establishments to think the unthinkable, and plan for worst case scenarios,” he stated.
“But it is the responsibility of political leaders to find solutions to head off these extreme outcomes.”
CHANGING US-CHINA RELATIONS
Moving forward, Mr Lee said how the US and China work out their tensions and frictions would define the international environment for decades to come.
“The US-China bilateral relationship is the most important in the world today,” he said, noting that their relationship has “altered significantly”.
For instance, since China started opening up 40 years ago, its GDP per capita has grown by more than 25 times in real terms, making it the second largest economy in the world.
The world has also benefited from China’s development and success, Mr Lee said.
“China has become a massive production and manufacturing base, lowering costs for the world’s producers, first for labour-intensive goods, and now increasingly for high-tech and technology-intensive production,” he said.
“It is also a huge market, importing everything from commodities and electronic components to aircraft and fine wines.
“On the consumer side, billions of people worldwide buy all manner of products, from Barbie dolls and basketballs to drones and mobile phones, made in China, though often incorporating foreign components and technology.”
UPHOLDING INTERNATIONAL TRADE
At the same time, Mr Lee said China’s growth has shifted and continues to shift the strategic balance and economic centre of gravity of the world.
“China has to recognise that it is in a totally new situation created by its own success,” he said, pointing out that it could no longer expect to be treated the same way as in the past when it was much smaller and weaker.
“China may still be decades away from becoming a fully developed advanced country, but it cannot wait decades before taking on larger responsibilities.”
And having gained much from the international system, Mr Lee said China now has a “substantial stake” in upholding the system and making it work for the global community.
“Chinese leaders have spoken up strongly in support of globalisation and a rules-based international order,” he added.
“China must now convince other countries through its actions that it does not take a transactional and mercantilist approach, but rather an enlightened and inclusive view of its long-term interests.”
For example, Mr Lee pointed out that China has almost tripled its share of merchandise trade since joining the World Trade Organization (WTO) in 2001.
“This is why the trade arrangements and concessions that China negotiated when it joined the WTO are no longer politically wearable for other countries,” he said.
Mr Lee added that it was in China’s interest to prevent the international trade framework from breaking down, and to implement “timely changes” that bring “greater reciprocity and parity” with its trading partners.
WIELDING RESTRAINT IN MARITIME ASPIRATIONS
Similarly in the area of security, Mr Lee highlighted that China’s words and actions were seen differently, now that it was a major power with the second largest defence budget in the world.
“To protect its territories and trade routes, it is natural that China would want to develop modern and capable armed forces, and aspire to become not just a continental power, but also a maritime power,” he said.
“At the same time, to grow its international influence beyond hard power – military strength – China needs to wield this strength with restraint and legitimacy.”
Nevertheless, Mr Lee said friction will arise between China and other countries from time to time, pointing to the overlapping maritime claims in the South China Sea as an example.
“China should resolve these disputes peacefully, in accordance with international law, including UNCLOS (United Nations Convention on the Law of the Sea),” he said.
“It should do so through diplomacy and compromise rather than force or the threat of force, while giving weight to the core interests and rights of other countries.
“Then over time it will build its reputation as a responsible and benevolent power that need not be feared. Instead China will be respected as a power that can be relied on to support a stable and peaceful region.”
COUNTRIES MUST ADJUST TO CHINA
In the long term, Mr Lee said this would allow China to continue to benefit from a conducive and friendly international environment, and enhance its influence and standing in the world.
“The rest of the world too has to adjust to a larger role for China,” he added, noting that it will have legitimate interests and ambitions, including the development of indigenously advanced technologies like infocomms and artificial intelligence.
“Countries have to accept that China will continue to grow and strengthen, and that it is neither possible nor wise for them to prevent this from happening.”
US ADJUSTMENT “MOST DIFFICULT”
The US, being the “preeminent power”, will have the most difficult adjustment to make, Mr Lee said.
“However difficult the task, it is well worth the US forging a new understanding that will integrate China’s aspirations within the current system of rules and norms.”
Mr Lee also highlighted the need for new international rules in many areas like trade and intellectual property, cybersecurity and social media.
“China will expect a say in this process, because it sees the present rules as having been created in the past without its participation,” he added, calling this an “entirely reasonable expectation”.
“The bottomline is that the US and China need to work together, and with other countries too, to bring the global system up to date, and to not upend the system.
“To succeed in this, each must understand the other’s point of view, and reconcile the other’s interests.”
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