Lee Kuan Yew’s China

Graham Allison, Robert D. Blackwill, Ali Wyne

Lee Kuan Yew’s China

25 February 2013

CAMBRIDGE – On the question of how the evolving relationship between the United States and China will influence the international order, there are few individuals whose observations receive equal attention on both sides of the Pacific. Henry Kissinger is one; Singapore’s founding father, Lee Kuan Yew, is another. In profiling Lee for Time magazine’s 2010 list of the world’s 100 most influential people,Kissinger observed: “There is no better strategic thinker.”

Seeing the twenty-first century as a “contest for supremacy in the Pacific” between the US and China, Lee hopes that the two countries can fashion a viable power-sharing arrangement. Clearly, “Chinese power is growing,” but he does not “see the Americans retreating from Asia.” In his view, “the best possible outcome is a new understanding that when they cannot cooperate, they will coexist and allow countries in the Pacific to grow and thrive.”

In Lee’s judgment, China’s leadership will make a serious effort to avoid a military confrontation with the US – at least for the next several decades. The Chinese recognize that only when they have “overtaken the US in the development and application of technology can they envisage confronting the US militarily.” Furthermore, Lee observes, China’s “great advantage is not in military influence but in…economic influence.”

On current trend lines, Lee predicts that China “will be the top importer and exporter of all East Asian countries” within two decades. He notes that it is currently “sucking the Southeast Asian countries into its economic system because of its vast market and growing purchasing power.  Japan and South Korea will inevitably be sucked in as well.”

Lee is certain that China’s leaders want to displace the US as the leading power in the Asia-Pacific. “How could they not aspire to be number one in Asia?” he asks. In the three and a half decades since China embarked on its market reforms, it has risen more rapidly along more dimensions of power than any other country in history. While it may not be in any “hurry to displace the US” regionally, this progress has spurred a “reawakened sense of destiny” that Lee regards as “an overpowering force.”

Lee worries less about the current generation of China’s leaders than he does about the next. The former have experienced “the Great Leap Forward, hunger, starvation, near collision with the Russians…the Cultural Revolution gone mad.” China’s young people, however, “have lived only during a period of peace and growth in China, and have no experience of China’s tumultuous past.” They think that China has “already arrived.”

In Lee’s view, China will eventually face “a fateful decision”: whether to seek to “be a hegemon” in the Asia-Pacific. He believes that the US, as the world’s leading power, can influence that decision “more than any other country.” If it “attempts to humiliate China…it will assure itself an enemy.” Lee concludes that, “Peace and security in the Asia-Pacific will turn on whether China emerges as a xenophobic, chauvinistic force, bitter and hostile to the West, because it tried to slow down or abort its development,” or “educated and involved in the ways of the world, more cosmopolitan, more internationalized and outward-looking.”

No one can be certain which it will be, but Lee offers wise counsel for statesmen seeking to avoid a catastrophic war between great powers in which there would be no winner.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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