Everyman’s Strategic Survey: Words of wisdom

Screen Shot 2019-06-10 at 15.39.29You can, and everyone with an interest in the global strategic situation and, especially, the evolving relationship between America and China should watch/listen to and read Lee Hsien Loong, Prime Minister of Singapore’s, address to the 2019 Shangri-la Dialogue. It stands, in my considered opinion, as a truly expert strategic survey of the current global situation by one of the free world’s most thoughtful leaders.

Some highlights follow. I am quoting him at length and without comment because I believe what Prime Minister Lee says perfect makes sense on its own:

  • Our world is at a turning point … [he says, to begin] … Globalisation is under siege. Tensions between the US and China are growing … [and] …
  • The US–China bilateral relationship is the most important in the world today. How the two work out their tensions and frictions will define the international environment for decades to come. The relationship has already altered significantly. China has totally changed since it started opening up 40 years ago. Its GDP per capita has grown by more than 25 times in real terms – China is now the second-largest economy in the world … [and] … On many counts, China’s growth is a tremendous boon, both to itself and to the world. China has substantially transformed its backwards, centrally planned economy into a middle-income, market-driven one. Even though it is still far from being a full market economy, more than 850 million Chinese people have been lifted out of poverty, an achievement unprecedented in human history. China’s development and success has benefited the world, too: 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;
  • It’s 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, but often incorporating foreign components and technology. Imagine, conversely, had China remained closed and underdeveloped; a failing China would have exported many problems to the world, quite possibly still including armed revolution. Its huge population would have been resentful and restless at being left behind by other countries;
  • At the same time, China’s growth has shifted the strategic balance and the economic COMM-EvolEarthEcon-062912centre of gravity of the world – and the shift continues. Both China and the rest of the world have to adapt to this new reality. China has recognised that it is in a totally new situation, created by its own success; it can no longer expect to be treated in 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. Having gained much from the international system, China now has a substantial stake in upholding it and making it work for the global community. Chinese leaders have spoken up strongly in support of globalisation and a rules-based international order. 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;
  • Frictions will arise between China and other countries from time to time. The overlapping maritime claims in the South China Sea are one example. China should resolve these disputes peacefully in accordance with international law, including UNCLOS. 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. In the long term, this will 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 … [and] … 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. China will have its own legitimate interests and ambitions, including to develop indigenously advanced technologies, like infocomms and artificial intelligence. As a major stakeholder in the international system, China should be encouraged to play commensurate and constructive roles in super-national institutions, like the IMF, the World Bank and the WTO. If China cannot do so, it will create its own alternatives;
  • The US, being the pre-eminent power, has the most difficult adjustment to make. But 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. New international rules need to be made in many areas, including trade and intellectual property, cyber security 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 – and this is an entirely reasonable expectation. The bottom line 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 much understand the other’s point of view and reconcile the other’s interests … [and, all the while] … stresses and strains have built up between the two over multiple issues, including cyber espionage, 5G technology, freedom of navigation, human rights and especially trade, where the two countries have reached an impasse. If both sides treat their trade dispute purely on its own merits, I have no doubt their trade negotiators – who are highly competent – will be able to resolve it. But if either side uses trade rules to keep the other down or one side comes to the conclusion that the other is trying to do this, then the dispute will not be resolved and the consequences will be far graver than the loss of GDP. The broader bilateral relationship will be contaminated; other areas will inevitably be affected, including investments, technology and people-to-people relations; every action taken by one side will be seen as a direct challenge to the other and elicit a counter-action. We will all be headed for a more divided and troubled world;
  • The fundamental problem between the US and China is a mutual lack of strategic trust. This bodes ill for any compromise or peaceful accommodation, but to go down the present path would be a serious mistake on both sides. There’s 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:
    • First, there is no irreconcilable ideological divide between the US and China. China may be communist in political structure, but it has adopted market principles in many areas. The Soviets thought to overturn the world order, but China has benefited from and – by and large – worked within the framework of existing multilateral institutions. During the Cold War the communist bloc sought to export communism to the world, but China today is not attempting to turn other countries communist. Indeed, it is often criticised for being too willing to do business with countries and leaders regardless of their reputation or standing, citing non-interference in the internal affairs of other countries,
    • Second, China has extensive economic and trade links with the rest of the world. It is a major node in the world economy, unlike the USSR, whose economic links outside the Soviet Bloc were negligible. In fact, all of the United States’ allies in Asia – including Japan, the Philippines, South Korea, Thailand, Australia – as well as many of its friends and partners, including Singapore, have China as their largest trading partner. They are all allies of the US, friends of the US, but their largest trading partner is China. They all hope that the US and China will resolve their differences. They want to be friends with both, to nurture security and economic ties with the US as they grow their business links with China. In a new cold war, there can be no clear division between friend and foe. Nor is it possible to create a NATO or Warsaw Pact equivalent with a hard line drawn through Asia or drawn down the middle of the Pacific Ocean, but
    • On the other hand, if there is indeed a conflict between the US and China, where will it end? The Cold War ended with a total collapse of the sclerotic planned economies of the Soviet Union and the Eastern European countries under the pressure of enormous defence spending trying to match SDI, or ‘Star Wars’. Even then, it took 40 years. It is highly improbable that the vigorous Chinese economy will collapse in the same way. China cannot take down the US, either. 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;
  • We should therefore do our utmost to avoid going down the path of conflict and causing enmity on both sides that will last for generations. Of course there is a duty of security and defence establishments to think the unthinkable and plan for worst-case scenarios, but it is the responsibility of political leaders to find a solution to head off these extreme outcomes. This is hard, because both sides have leaders facing powerful domestic pressures. In the US, the political mood is deeply divided and disgruntled. Large segments of American society have lost confidence in globalisation and multilateralism. According to a Pew [Research Center] survey last year, nearly half of all Americans have an unfavourable opinion of China. As their presidential elections approach, these attitudes will surely deepen because neither the Republicans nor the Democrats will want to risk being accused of being soft on China. Regardless [of] whether President Trump is re-elected or another Republican or Democrat wins, these sentiments will not go away;
  • I am glad that more countries have expressed interest to join the CPTPP, including South Korea, Thailand and the UK. China is also watching the CPTPP carefully; they are not ready to join now, but I hope that they will seriously consider doing so sometime in the future. Similarly, I hope one day it will become politically possible for a US administration to rethink the US position and recognise that it stands to gain, economically and strategically, from becoming a member of the partnership that it played such a leading role in designing  … [and] … countries in the Asia-Pacific are working on the Regional Comprehensive Economic Partnership (RCEP) – another alphabet soup. It has a different footprint from the CPTPP: it covers all the key countries on the western side of the Pacific, including Northeast Asia, Southeast Asia and also, importantly, Australia, New Zealand and India. This inclusive configuration minimises the risk of the RCEP being misperceived as a bloc that excludes the US and its friends. With such a wide range of participants, the RCEP’s standards are naturally less ambitious than the CPTPP’s and the deal is also much harder to negotiate. Nonetheless, I hope the participants can take the final step to complete the RCEP by this year, or if not, as soon as the election schedules of the key players allow; and, finally
  • To expect every country to adopt the same cultural values and political system is neither reasonable nor realistic. In fact, humankind’s diversity is its strength. There is much we can learn from one another, from the differences in our values, perspectives, systems and policies. The story of humankind’s progress has been one of exchanges of ideas and of continuous learning and adaptation. Henry Kissinger said last year that we are in a very, very grave period for the world. No one can predict which way events will develop. At different times in the last two centuries Southeast Asia has seen rivalry between great powers. It has experienced destruction and suffering from war and occupation. It has been divided into opposing camps. It has seen how isolation from the world economy led to stagnation and sometimes conflict. At other times, it has benefited from international cooperation that created an open, stable environment where countries could prosper in peace … [however, taking] … a long view, we cannot rule out any of these eventualities. But in our own generation we must work together to maximise the chances that countries will have the wisdom and courage to make the right choices, opt for openness and integration, peace and cooperation, and so preserve and expand the progress that we have made together.

There is a huge amount of ‘meat’ in that 40-minute address. I sincerely hope that everyone who cares about the global strategic situation, especially Andrew Scheer and his team and Prime Minister Trudeau’s team, too, reads an/or listens to and heeds Prime Minister Lee’s sage words.

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