Transcription
Five thousand years... and don't forget we invented all these things, and we're going to go ahead in the next five thousand years. It's the only country where a language has survived five thousand years. The only country where the present generation shares the same basic thinking as the past, and they're very proud of it. I mean, you read Hu Jintao's speech on the 60th anniversary. "We have five thousand years of civilization. We are going to get there." So when you tell them you ought to do this, you ought to do that, they say, "Yes, thank you." And in the back of their minds, "We have lasted five thousand years, have you?"
Singapore's late founding father, Lee Kuan Yew, spent much of his time studying China's culture, leadership, and global influence. In his final book, published in 2013, Lee dedicated the very first and longest chapter to exploring China's culture and potential future, showing just how important he believed China would be, not only for Singapore, but for the entire world. Though Lee did not live to see the emergence of Chinese giants like BYD, ByteDance, or DeepSeek, he was confident in China's continued rise. In fact, as far back as 1967, long before others recognized the shifting balance of power, Lee was already warning the world to take China seriously. "If you believe that the Chinese people will just splinter up into so many warlord communist committees, each governing a province or even part of a province, then you will make one of the gravest mistakes about Asia. I'd say that they are determined as a people to unify and build a modern, powerful, wealthy Chinese nation, and I say good luck to them." However, he also emphasized that China has more handicaps and obstacles to overcome than most observers recognize. "China will be creating, you know, a huge market because of the number of people who become middle class, 1.3 billion growing. Are there risks for them? Well, they have enormous problems."
In this video, we'll explore Lee Kuan Yew's insights on all five generations of Chinese leadership, his bold predictions for China's future, the weaknesses that could slow its rise, and much more, including his take on Tiananmen, BRICS, and a US-China trade war.
I visited China in 1976. Everybody dressed the same, everybody gave the same answers in the last days of the Mao era. Even then, talking to them, I had a premonition of their tremendous brain power. Although the People's Republic of China is just over seven decades old, Lee understood that its foundations were far older. To him, modern China was simply the latest chapter in a 5,000-year continuous civilization. "They call themselves Marxist-Leninist, but in fact, they've always remained Confucianist."
Lee also recognized that after Britain, no country has shaped Singapore's modern development more profoundly than China. From the Qing Dynasty establishing consulates in the 1870s to the significant influence of both the KMT and Chinese Communist Party during and after World War II. Lee's own connection to the mainland can be traced back to his Hakka great-grandfather, who migrated to Singapore from Guangdong in the 1860s. "My greatest grandfather came from Dapu. He made a small fortune. He went back. His wife did not want to go back with him, so that's why I'm here." Though Lee would never visit his ancestral village for political reasons, his first official visit to China would come more than a century after his great-grandfather's journey, a moment that would reshape Singapore-China relations forever.
Ironically, in the early years of power, Lee's fierce anti-communist stance made him deeply unpopular among many Chinese in Singapore, with even Beijing labeling him a "running dog of US and British imperialism." "Singapore was being called a lackey of America, and I'm a running dog of the Americans and the British." But geopolitics were shifting fast. As China's tensions with the Soviet Union deepened, it needed new allies in Southeast Asia. And so in 1971, Singapore's Ping Pong team received an invitation to compete in Beijing. And in 1975, Foreign Minister S. Rajaratnam visited China, setting the stage for Lee to make his first official visit to China in May 1976.
"I would admire Mao Zedong. He has his faults, but he unified China and was a very great guerrilla leader. Mao wanted a strong China. He didn't create it, but he created a liberated China. He unified it." Though official diplomatic ties were not yet established, Lee's delegation received a full welcome ceremony upon landing in Beijing. Premier Zhou Enlai, who extended the invitation, passed away months earlier, so Lee was greeted by Hua Guofeng, Mao's designated successor. From the outset, Lee would insist that all diplomatic meetings be conducted in English, and he would purposely include Rajaratnam and Ahmad Mattar in his delegation to emphasize Singapore's multicultural identity. China, in turn, wasted no time raising its concerns about Singapore's military ties with Taiwan and its relations with the Soviet Union.
"Having met Hua Guofeng in Beijing, I sat down and listened to him. I said, 'Now I have something very serious to talk to you. I hear you are in military alliance with Taiwan. Taiwan belongs to China.' I said, 'Yes, we know that.' I decided to counter-attack. I said, 'By the way, you told me yesterday that Communists never interfere in the activities of other countries. Why are you giving arms and support to the Malayan Communist Party to overthrow the Singapore government?'"
But despite his firm stance, Lee's delegation would receive a surprise invitation to meet Chairman Mao himself, an extremely rare honor for foreign visitors. But what they saw was only a shadow of the man who had united China after 200 years of chaos. "You knew Mao Zedong? Yes, but then he was already half a vegetable."
Lee also recognized that had Mao or Hua remained in power, China could have imploded like the Soviet Union. "Without Mao, Mao Zedong, maybe China would not have been so easily liberated as they call it, and the KMT defeated, and the People's Republic pronounced. On the 1st of October 1949, and he said: 'The Chinese people have stood up.' But had he continued, I think China would have been in a parlous condition."
After meeting Mao, Lee and his delegation traveled across China, but found themselves surrounded by paranoia and propaganda. Officials spoke to them in robotic, rehearsed phrases, and everyone wore the same Mao suits. "The China I visited in 1976 was dilapidated, down, grey, drab, everybody in the same Mao jackets. I was put up in the best hotel in Shanghai, went down at night after dinner to see what it's like, and dark streets, unlighted shops, and whole streams of people, so you've got to keep on moving, otherwise you're holding everybody up."
And yet, despite the jarring experience, Lee did come away with one lasting impression at the end of the trip. He was struck by China's cultural confidence, where the people believed fiercely that they were destined to restore their 5,000-year-old civilization. More than a diplomatic milestone, this first visit laid the foundation for future Singapore-China relations and gave Lee a crucial reference point for understanding one of the greatest national transformations in modern history.
"Deng Xiaoping is clearly a man that you admire as much as anybody that I know. If you have met him and you know what China would have been without him, you cannot but admire the man. At 70... More than admire. I mean, you look at him as one of the giants of our time. Yes, he saved the country. After the Cultural Revolution? 1.2 billion people would have imploded like the Soviet Union. After the Cultural Revolution or after Tiananmen or when? No. He saw it in the 1970s, before Tiananmen. He saw it before the Soviet Union imploded. And he said, 'Open up.'"
As previously discussed on this channel, one of the most consequential meetings in modern Singapore-China relations took place in 1978, when Mao's successor Deng Xiaoping visited Singapore. "He looked at me and he said, 'I came to Singapore in the 1920s on my way to Marseilles. It was a lousy place. I congratulate you, [now] it's a nice city. It's a garden city.' So I looked at him and said, 'We are the descendants of the landless peasants, not the scholars, not the poets, not the people who are artistic and other talents. You have them. Whatever we can do, you will do better.'"
In the years that followed, Lee visited China almost every year between 1980 and 1990. Each time he saw a country changing at breakneck speed. He noticed that people were happier, they dressed how they wanted, and they spoke more freely. Lee also began to understand China's system more deeply. He was impressed by the thick layer of talent spread over the continent, where political leaders weren't chosen by their popularity with voters, but through a vigorous meritocratic process that starts as early as primary school. "It's my voters who will make me the chief minister in the next election. But in China, when they tell the party secretary, 'This must be done,' and you don't do it, you know in the next reshuffle you'll move sideways. So if you want to get up to the Politburo, you make sure it's a success. Because that's the way it is. The system works because if you perform, I promote you; you don't perform, you're out."
However, as he traveled across the country, Lee also saw the immense challenges that Chinese leaders faced, from the lack of educational resources in poorer regions, to the increase in corruption and nepotism that quickly came with Deng's reforms, issues that exploded on the world stage in 1989. When the Tiananmen Square protests broke out in the spring, Lee watched with unease as the events unfolded on TV. The students early on had started with calls to end corruption and inflation, but when they began directly challenging the government, and then Deng Xiaoping himself, Lee predicted that it would not end peacefully. On June 4th, Lee put out a public statement on the situation, stating: "But Lee, unlike the Western press and media, didn't outright condemn the Chinese government, believing that Tiananmen 'wasn't the end of the world.' 'The Western media wants sensation, and they want to portray China as an intolerant, oppressive country that tolerates no dissent, that wants uniformity and absolute obedience. So when there are all these demonstrations which probably were also inspired, it was good prime time television.'"
Privately, Chinese officials told Lee that the government had lost control because their police lacked basic riot control tools like water cannons, and claimed that the students had stolen weapons from the People's Liberation Army and were being influenced by foreign intelligence services. Reflecting on Tiananmen, Lee believed he saw something few others did: that Deng, given his past experiences, could recognize the early signs of collapse and foresaw that if the students took power that day, it would plummet China to another century of chaos and humiliation. Lee saw him as a man who made an impossible choice, and despite Tiananmen, considered Deng a great leader who changed the destiny of China and of the world. "If nothing goes wrong, there's no hyperinflation, no civil war, no international wars, then I think Deng Xiaoping will go down in history as a man greater than Mao, because he built modern China, or he started modern China. He got China started on the path to make it a modern industrial nation, and I have a great admiration for him... regardless of Tiananmen and all the useful Democrats who made that Statue of Liberty, they would have brought perhaps one week of euphoria and brought China down in chaos. As indeed, they began quarreling amongst themselves soon after they left China, but Deng Xiaoping has got China going in a way which nobody thought he could, and I think that was greatness."
Singapore would formalize diplomatic ties with China in 1990, and that same year, Lee met Deng's chosen successor, Jiang Zemin. Unlike previous Chinese leaders, Lee described Jiang as unusually extroverted and well-versed in both Eastern and Western culture and traditions. Lee would credit him for rebuilding China's education system and continuing Deng's economic reforms. A couple years later, in 1992, Deng would make his famous southern tour of China and tell his officials to learn from Singapore. This sparked a wave of Chinese delegations visiting Singapore, which in turn inspired Lee to propose the landmark Suzhou Industrial Park joint project. "In 1992, 14 years later, when they were blocking him, he went down to Shenzhen and said, 'Open up, learn from the rest of the world, and most importantly, learn from Singapore.' And thereafter, hundreds of delegations came with cameras and camcorders to learn from us. So I decided, you don't learn by visiting a place for a few days and taking pictures of it. I said, 'If you really want to learn from us, we start a project in Suzhou, and we'll show you how we plan, how we build, how we eventually have an integrated city.' And as of today, it's an icon in China, and Singapore is known for it."
Also recognizing the vast economic opportunities, Singaporean corporations would invest billions of dollars into China during the 1990s, quickly making Singapore one of China's top foreign investors and further strengthening the economic partnership between the two countries. Additionally, in 1993, thanks to Lee's strong relationship with both Beijing and Taipei, Singapore was chosen to host the historic first official talks between the PRC and Taiwan since 1949.
Lee would also play a crucial role in bridging the divide between China and the West, consistently urging the United States to engage with China rather than attempting to stop its rise. Notably, during the tense aftermath of the 1999 US bombing of China's embassy in Belgrade, Lee engaged directly with the Clinton administration, strongly advocating for China's entry into the World Trade Organization. "That Clinton turned down Zhu Rongji for this WTO. So we said to him, 'That's a great mistake.'"
Reflecting on China's transformation at the end of the 20th century, Lee noted the immense rapid change happening in the country, stating, "It is hard to believe how different our people's attitudes, habits, and willingness to speak their minds. Books are written and published today that would have been treason in the 1970s or 80s. The free market and modern communications have brought about more openness and transparency, and will make China as different again in another 20 years." "Today they are producing a Chinese little car called the Cherry. In 20 years they can produce you a Lexus or a BMW, or in 30 years, a Mercedes."
In the early 2000s, Lee would meet Jiang's successor, Hu Jintao, describing him as a quiet, thoughtful leader with an incredible memory. In Lee's view, Hu would be remembered for starting the process to build a more balanced society for China, tackling huge challenges like the massive migration from countryside to cities, the widening gap between rich and poor, and managing the 2004 SARS outbreak. But it was Lee's 2007 meeting with then Vice President Xi Jinping that left a deeper impression. Describing him as a man of great breadth, Lee was particularly struck by Xi's remarkable resilience in climbing back up the government ranks after his family's expulsion to the harsh countryside during the Cultural Revolution, putting him in the "Nelson Mandela class of persons."
The very next year, Lee would attend the 2008 Beijing Olympics. Witnessing the grand spectacle, he and the other world leaders saw a China that was ready to reclaim its position as a global leader. "You watch the Beijing Olympics opening. In one hour, Zhang Yimou with his team projected to the world 5,000 years of Chinese scholarship and achievements using mass dancers, mass Tai Chi performances, and so on. I was there. I was watching the reaction of the foreign leaders, and I knew that they knew this was a country that's going to rise."
Engaging with the architects of modern China across five generations of leadership, Lee gained profound and clear insights into the nation's future growth, as well as the formidable challenges ahead. He believed that the ongoing contest for global influence between the United States and China would define the 21st century. "That the relationship between the United States and China, based on what you just said, has become the most important global geopolitical issue of the century. How they both handle it."
From the Chinese side, in a very pragmatic, almost cold-blooded and clinical fashion. Observing China's rapid military advancements, he judged that in the short term, a direct military conflict between the two powers was unlikely. "Nuclear weapons between big powers, I think, is a plus because it stops major wars. A bipolar world is more secure, both sides have weapons of mass destruction that prevents a conflict." However, he identified Taiwan as the only potential flashpoint for any military confrontation. "Do you believe the Chinese will take over Taiwan? I believe reunification is inevitable in the next 50 years. I cannot say maybe 50, maybe more, maybe less if foolish things happen in Taiwan. If they feel that Taiwan, under a new government, a new president, is edging away and determined to make a run for it, they're going to stop it." But despite this, Lee doubted that the United States would have the resolve to engage in a full-scale war over the island. "And the United States is adding to its submarine fleet. The United States has more of a military presence than it had. But is it going to be used? It's a stand-off. Supposing you have a fight with the Chinese over Taiwan and you win, is that the end of the problem? That would be a second round, that would be a third round, there would be a fourth round because they have abiding interests which you do not have because of geography and demography and compelling interests."
Rather, the competition will be around economics, innovation, talent, and specifically trade, a contest that Lee believed America has been losing for quite some time. Well before Trump's sweeping tariffs on Chinese goods, Lee would spot a number of policy missteps from the United States, particularly its move towards protectionism. As early as 1985, well before China's entry into the WTO, Lee warned that attempts to contain China would not revive American manufacturing. "The answer to job losses is more, not less trade. America can upgrade her declining low-value added industries, or they will continue to decline whether America goes protectionist or not. Just as the ancient agricultural societies of pre-industrial China and Japan, where the self-sufficient subsistence economies based on buffalo and manpower had to change with the advent of steam and the industrial age. A replay of the depression of the 1930s which led to World War II would be ruinous for all." And in 1994, with parallels to today's trade war, Lee warned the United States that imposing an economic embargo might slow China down but will not stop its transformation into a superpower, predicting that it will turn to other major markets such as Japan and Europe, which he believed would be unlikely to support a containment strategy. He warned: "Instead, Lee advised that if the US truly wanted to counter China's growing economic influence, it should focus on forging its own free trade agreements around the world just as China was doing. So what should the United States do? Should it be rushing into Asia saying free trade agreements with everybody? We want to give you an economic opportunity with us? Yes, I would do that. That's the first step. I would do that. What else? I would say make friends with all. Don't take sides. You gain nothing by taking sides. You can't change the dynamics."
However, watching America over the years, he would see it becoming a declining power in Asia. "Is America a declining power in Asia? Over the last eight years, America has been so preoccupied with Iraq, Afghanistan, Iran, it's left East Asia fallow, and there will be no free trade agreements with any Asian country other than Singapore. That if there's no US-ASEAN FTA, in 10-20 years, ASEAN's economy will increasingly be sucked into the China market, and the US market will be a secondary market. If you look at Japan, China-Japan trade now is bigger than the Japan-US trade, proximity, and complementarity. I believe the US have a lot of ground to catch up, and probably they did not believe this would happen so fast, but it has."
Fast forward to today, and China stands as the largest trading partner for over 120 countries, cementing its dominant role in the global economy...
Lee also recognized that unlike in the West, many nations in the Global South admire China, viewing it as a model for rapid development and a credible alternative to Western dominance. "The countries of the West buy the oppressive regime line. The neutral countries, especially in Asia and Africa, and maybe even Latin America, do not buy that line. They have been to China, they know that China is making tremendous progress, and because of peace and stability in the country, that progress is possible, and they are admiring that progress." In fact, Lee observed that China's foreign policy was winning it more friends, unlike the United States. "I'm not interested in changing regimes. I'll deal with you as you are, whether you're a dictatorship, whether you're a tribal leader, whatever, and we maintain good relations. I need your oil, I need your resources, let's do business. There's no evangelistic urge to change things. Is America, you think, a proselytizing country? They want to sell their values and they believe in their values? It's always has been and always will be."
Which brings us to BRICS, a key player in the US-China power struggle. Although Lee did not live to see the current makeup of BRICS, he first mentioned the grouping in 2010 with skepticism, stating: "Now, if you have a major power with different long-term considerations and objectives, I don't see how the cohesion can be maintained." However, by 2012, Lee acknowledged that the BRICS countries could gain influence over time and serve as a counterweight to prevent excesses by the Americans and the Europeans. Still, he remained cautious, emphasizing that these BRICS nations are not natural partners, with many countries wary of getting too close to China. "I think India and China has got more preoccupations with each other than with the rest of the world, also for a lot of other countries. If you look at the disputes over the border that arose after the 1962 clash, Arunachal Pradesh is still not settled, and I think that's high on the agenda of both India and China. Between China and Russia, I think there's very little conflict of interest now. They've settled the borders across the Amur River. I'm not sure if that's the end of the story because the Russians have co-opted large parts of Siberia, which used to belong to China. Their population is not growing, and the Chinese population is moving and doing business. So demography will create a problem later on."
In fact, Lee believed that many of its neighbors remained cautious due to China's historical view of itself as the regional center, where in the past surrounding states were seen as tributaries or vassals to a vast Chinese empire. Lee illustrated this by recounting how the Sultan of Brunei was once taken to visit his great-great-grandfather's mausoleum in Nanjing, a ruler who died in 1408 while paying tribute to China, serving as a subtle reminder of China's long-standing dominance and influence in the region. Lee warned that without a strong American presence, China could easily replicate this hierarchical model, now that it has the power to marginalize countries that displease it. "Vietnam. Vietnam is a special case. It's a long history of non-friendliness and are chary of the Chinese. I mean, you take motorbikes, for instance. If they have a free trade agreement with China, their motorbike industry will be wiped out. Chinese motorbikes will be cheaper and better. They cannot really get close to China."
"Are most of the countries in the Asian region scared of China, wary of China? Wary, I would say, is the problem, is the word. Not scared. Wary, in that if you know you... you take a step which hurts their core interests, there'll be retribution. What they would do is shut off their markets to your goods. That's the least they can do."
"The growing Chinese middle class is good for everybody, though. Oh, yes. It makes a consumer demand that everybody wants a piece of, including India." "I'm not sure. You're not sure India does? Because they're scared of the competition. The Chinese have offered India a free trade agreement. The Indians have not snapped at it, because then Chinese goods will go into India and compete, and the Chinese car will knock out the Maruti."
However, Lee warned China that as it becomes the dominant power in its region, rising nationalism and confidence could easily give way to arrogance, the very same arrogance that contributed to China's decline during the Qing dynasty, when it refused to learn from the West's Industrial Revolution. He recounted how in the early 2000s, both he and his son were suddenly branded as enemies by the Chinese public. "When the deputy prime minister, our deputy prime minister, who is now prime minister, went to Taiwan, the barrage of vicious articles on him on the internet, from young students, was intense. Suddenly, from a good old friend, we became a brand new enemy... overnight... you know, that gives us cause for reflection."
With this, he also saw potential in a younger generation fueled by a desire for retribution against those responsible for China's century of humiliation. "I have no doubts that they will have a peaceful, they want a peaceful rise this generation, but the grandchildren may think that they have already arrived, and then they begin to flex their muscles, and you will have a very different China. So I put this question to them, and they say, 'No, no, it won't happen. We'll tell them, tell them, we'll teach them all the lessons.' You know, the grandchildren never listen to grandfathers. So that's one problem. The other problem is a more crucial one. If you start off in the belief that the world has been unkind to you, and the world has exploited you, the imperialists have devastated you, you know, looted Beijing, done all this to you, one day you get on the top table, you'll square accounts... Well, that's no good."
However, Lee also reminded young Chinese leaders that the world was becoming increasingly multi-polar, and if China wanted to build lasting global influence, it needed more than just economic and military strength. It needed soft power. As he put it, "People must admire aspects of your society, hence the many foreign students now going to America to study in their universities." In fact, to underestimate the other great powers would be a mistake. "You're not going back to old China, when you were just the only power in the world, as far as you know. Rome was far away, but you are just one of many other powers, many of them more innovative, more inventive, more resilient in meeting with changes in technology and changes in social life and so on."
Lee would also remind China that unlike its past, it is now relying on the world for its growth and needs to cooperate in as many areas as possible. "This is the first time where the Chinese are growing but dependent on the world for its resources. But they're going around the world signing up contracts in Iran and in Africa. Absolutely, but before that, it's all within the Chinese empire. They don't have to worry about the rest of the world. This time, they have to worry about the rest of the world because without the resources, the oil, the iron ore, nickel, whatever, the growth will stop."
To highlight this, in 1994, Lee urged China to clarify its position in the South China Sea, and if any resources that it found will be shared with its Southeast Asian neighbors. He warned that such transparency was essential to reduce regional anxieties, advice that contrasted sharply with the rising tension seen in later years. "What did you think of Secretary Clinton's speech in Hanoi? I thought it was good. She put on, she drew the red lines. These claims over the islets must go in accordance with the law of the sea and not just by brute force. The Chinese had said, 'We have...' they produced an old map. An old map that said, 'These are ours.' Navigational rights. And she came in and said, 'We go by the law of the sea, which means where is it nearest to.'"
Instead, he urged Chinese leaders to recognize their responsibility, not just to pursue national advancement, but to contribute positively to global development as they become the leading power. "What you got to get them to understand is with it goes responsibility. You can't just take copper and gold and to hell with it. You've got to have a responsibility for the people's copper and gold you're mining. It goes with the job. And they will have to learn that. I think they're already beginning to learn that. So they're giving something back."
And seeing their strength in the high quality manpower, four times the size of America, will produce about two and a half million engineers a year, who will go to any part of the world they're told to and there are no problems about expat allowances, American schools or health services, they're hungry, they're willing to change their lives. And if it goes on like that... anti-free trade, you're out of the economic race, and you're out of the economic race, you will lose in the long run. And after a while, people in America will say, "Look, what are we doing maintaining peace and security in the Pacific for the benefit of the Japanese, the Koreans, the Chinese, and the ASEAN countries?" So you'll have a very different world. The contest is an economic contest...
When it comes to the economic race, Lee saw America's growing national deficit as a major concern that could undermine both the US dollar's strength and its ability to maintain its military power in the Asia Pacific. "To hold the ground in the Pacific, you must not let your fiscal deficits and your dollar come to grief. If it comes to grief in the short term and there's a run on the dollar for whatever reason, and they begin to move their assets out, that's real trouble."
However, Lee also believed the Chinese Yuan was not ready to replace the US dollar, as China prefers to maintain strict control over its currency. "The Chinese Yuan is highly controlled. They can make you go up, they can make you go down, and you're not quite sure which way is going to go. Whereas in the US, you can look at the figures and you can read the federal reports every time they make a decision and you can make your guess." Still, he predicted that China would eventually relax these controls. But doing so would bring its own set of challenges to manage. "Do you think that the Chinese will come under increasing pressure to float the currency? It is not tenable to have this imbalance in the trade between them and the US and the EU. You keep on accumulating surpluses, there comes a time when it does you no good. Finally, the US dollar goes down. They keep on telling the US, 'Do not let the value go down,' but if you carry on this business and don't let the US grow, the dollar will go down." And so what, your holdings of US dollars will be worth less. So sooner or later, they'll come, if they've not already come to a conclusion that they've got to ease up gradually and slowly at their own pace in a way that they believe is to their maximum benefit.
In terms of China's economy, Lee believed China's short-term economic growth was largely driven by massive investments in high-speed rail and infrastructure. "Will they be able to create the domestic demand that's necessary as they find exports reduced? Slowly, but in the meantime, there's keeping the economy going by enormous expenditure on infrastructure. High-speed roads, high-speed railways, bringing water from the south up to the north where it is arid and dry... huge enormous mammoth projects. That keeps it going." However, he warned that for long-term sustained growth, China must shift from an investment and manufacturing-led model towards a more consumption-driven economy. "Well, the Chinese are well aware that their growth right now should depend as much on domestic assumptions as exports. So that means they are having to restructure their economy. That means they have to give social security for health, unemployment and sickness benefits before people before their consumers will spend."
But without a robust social safety net, he predicted it would take a couple generations of rising wealth before Chinese citizens transform from savers to spenders. "Well, there's great hope that they will become more of a consuming economy and will become more of a saving economy. You point that out. The Chinese have had 4,000 years or 5,000 years of all kinds of catastrophes, earthquakes, floods, famine, invasions, where the central government failed entirely. And nobody can help you. You've got to help yourself. They stuff the money under the pillow because banks are not trustworthy or gold. And that habit is not going to change. It would take a long time. It would take one, two generations of affluence. It may happen in the cities, but it's not going to happen in the countryside."
This means in the short term, China would avoid fully decoupling from the US. "Chinese need US markets, need US technology, needs their students to go to the US to study US ways and means of doing business so that they can improve their lot. That is going to take them 10, 20, 30 years. So if they'll quarrel with the US and become bitter enemies, all that information and all that technological capabilities will be cut off from them. So it will be maintained at the level which allows them to still tap the US." And for similar reasons, they'll not want to weaponize their US Treasury holdings. "Should the United States be worried about the fact that the Chinese hold so much debt of our debt and therefore, I think Secretary Clinton has said, you know, it's hard to negotiate with your banker. Because your banker has such a large stake in you. He can't afford to see you go down. It works two ways. And they know that."
However, Lee foresaw that as China's consumer economy matures, China could gradually reduce its dependence on Western economies with more intra-Asian trade and economic integration. "Has Asia decoupled from what's going on in the Eurozone or the US? Or we are very much dependent on them. I do not think it will decouple. Maybe in 30, 40 years' time, when China has grown sufficiently large and India has grown sufficiently large, and the intra-Asia trade and investments have grown, then you may talk of a separate entity which can take the place of what is at present now. The Chinese depend on Americans, the Indians depend on the whole world. You've got to wait for the time when the Chinese are consumers themselves, and so are the Indians, and then that's a different story."
As an extension of this economic battle, Lee believed that in the globalized world, the country that can attract the best talent and innovators will outperform the rest. And Lee believed that America was well-positioned to do so compared to China. "It's not just American talent that gets you here. You're just 300 million people, and they've got 1,300 million and very many more able people. But you are attracting all the adventurous minds from all over the world and embracing them. And they become part of your team. I don't see two million Indians and half a million other people becoming part of China. First, the language is so difficult. Secondly, the culture is not embracive."
However, Lee warned that America's continued ability to attract talented Chinese would diminish if it adopted a hostile stance towards Chinese people. "Tens of thousands of bright Chinese students in America. You give them a bad impression, a bad time. They'll go home nursing a grievance." But he also noted that the many talented Chinese who settle abroad may find it very difficult to return to China given the freedoms they enjoy in American society. "He said, 'We're trying to get highly educated Chinese to go back.' Yes. Yes, of course. To go back. I said, 'Well, what do you say to them?' 'Say to them you'll have opportunity. And I say to them the homeland needs you.' That's what he said. That doesn't sell. What will sell is you can leave anytime you want and allow your children special educational facilities. And all of you can keep your American green card or passport. And that works.' Well, I'm not sure. But they'll go back and test the waters. Some. But will you go back and stay? Maybe because for the older generation, they're emotionally tied up. But will your children stay? Their upbringing has been here, and they go back to China and they say, 'Wow, this is a very regimented society. Papa, I'm going back.' So there's no comparison. There are... it's chalk and cheese between the two societies, especially for young children who can see how independent American children are and can grow up and become anything you want... beatniks, if you like, to use an old expression... or whatever. In China, you come out like sausages."
Moreover, Lee believed China's culture, where top talent often prefers government roles over entrepreneurship, will limit its innovative edge compared to the US. "Traditional Chinese societies have valued first the scholar. Many of the best graduates of their top universities go for a job in government rather than join a private company or start a business on their own. With the Americans, it's different. It's always been the opposite. The best graduates go into business or join the big corporations." Yet with China's vast pool of talent, he did not see it falling far behind America. "So when you say China is entrepreneurial, I say yes. But the top, the cream of the crop still goes into government. But they have so many bright people that they can do it."
More concerningly for China, Lee pointed to the inefficiency of their state-owned enterprises, predicting that they would eventually need reform. "State capitalism is not as effective as private capitalism. Would you stay awake at two, three o'clock in the morning if it's not your company at stake with the latest oil prices? No. So you wake up tomorrow morning knowing that your salary is intact. So I believe very strongly that private capitalism easily outdoes state capitalism."
Ultimately, despite these challenges, Lee foresaw that China would become the most dominant power in the region as America scales back. "If the U.S. gradually scales down its presence in the Pacific, do you see this creating difficulties for Japan, South Korea, the other non-Chinese countries in this area? Inevitably, because all of them combined, Japan, South Korea, India, the whole of ASEAN, can't balance China. Without the U.S., the balance is not maintainable. Will there be an arms race in Asia then? An arms race in which the smaller countries must lose. So it would all depend on China's aggression or lack of it if we come to that. Well, I'm not sure it's aggression, such as dominance more than aggression. Sun Tzu says the Art of War is to win it without going to war."
When it comes to China's internal problems, Lee identified systematic corruption as one of China's most critical internal threats. Rooted in its deep-seated Guangxi culture, where gift-giving and favoritism based on personal relationships undermines institutional integrity. "Well, if you... read Hu Jintao, he said the biggest threat is corruption. Corruption is a matter of life and death for the party. And I think that's absolutely true because if the corruption continues, confidence and faith in the party will decline, and that will create enormous problems for them." This problem also extends to a weak rule of law, where decisions and changes can be arbitrarily imposed by those in power. "But there are some areas where they will take a very long time to be able to do what we are doing. And that's to change the system from opacity to transparency, from no protection for copyright to protection for copyright and rule of law. There are two rules of law in China, one for the ordinary citizen and the other for 76 million members of the Communist Party. And the judges will do what they know what the leaders require to keep the country stable."
More seriously, he witnessed a rural-urban divide, which could eventually convert to civil unrest. "So I think there are serious problems of equity there. And you can see how beautiful Beijing is, how beautiful Shanghai is. And I'm still in my mud house. When is my turn? Nobody knows. I mean, maybe 50 years, 60 years, because the trickle-down effect will take a very long time." As part of this, Lee highlights how China's Hukou system restricts rural migrants' access to urban social services, leading to further disparities. "The income gaps between the people who are doing well and the people who are not doing well. And the many migrants living on the fringes of the city with no Hukou, no covering of educational or health. So they are an underclass around every city. And every city needs them for their construction industry. So I see a problem in the making."
He also noted China's rapidly declining birth rate, stating, "The Chinese with the one-child policy will regret bitterly when they find one child having to support four grandparents."
But perhaps on a much deeper level, Lee would predict that Chinese society would undergo an immense spiritual transformation as they adapt to the pressures of modernization, globalization, and the breakdown of traditional norms. "Because with the Cultural Revolution, that destroyed almost all the values. And now with the market economy, which puts money in front of everything else. And especially at this period of time, people in China are thinking about what our true values are, the common values that we hold tight. When you change rapidly, as Japan did after the war, you have what you call anomie. Anomie is a feeling of disorientation. You were there, you understood your bearings. Now your bearings have changed. So they want to rediscover a compass. So in Japan, new sects, new religious sects appeared. In Korea, large numbers became Christians. In Taiwan, more temples. In Hong Kong, more temples and churches. So at that stage, I decided we should reinforce for the Chinese the basic Confucianist concepts, especially the Wulun, how you behave, father and son, man and wife, father and children, brothers between themselves and friends with friends, and loyalty to the state or the emperor or whatever he is. Does that work? Well, I think it's partially working. And I think our problem now is to reinforce that, in the modern context."
While Lee recognized China's many internal and external challenges, he believed that their current system would not collapse anytime soon, emphasizing that change within the party would be slow and steady. "There's very tight control at the top. They do not like the established order to be tinkered with. If it's working fine, leave it. And if anybody has something good, we'll borrow it and test it out. Why take the risk? If you let 1.3 billion smart guys experimenting, you'll have near chaos. And they're capable of thinking up new things." In fact, Lee saw signs of gradual political reform, noting that China had already begun moving to a more participatory form of governance. "But are they moving towards some form, not a Western form, some form of more participation in the political process? They are co-opting all the successful people into the Communist system. That's a smart policy... Jiang Zemin calls it the three representatives. So whether you're an artist, whether you're a businessman, whether you're an activist, anybody who's got the extra drive to contribute to a greater China, come and join us." And he also highlighted the emergence of intra-party democracy, pointing out that unlike past leaders, Hu Jintao did not personally select his successor Xi Jinping, an indication of evolving leadership norms within the party. "Hu Jintao would have preferred Li Keqiang who was in the Communist Youth League with him. But when a poll was taken and unofficially they found that Xi Jinping was the better man, more favored, he gracefully accepted the position and Li Keqiang took the second position."
Additionally, Lee believed that with the rise of the internet and a new generation of Western-educated leaders emerging, China's political system would undergo further change driven by fresh perspectives and global exposure. "They asked me, 'Is China a friend or a foe?' I said, 'Neither at the moment, and it's really up to you and how you deal with them that will decide whether they are friends or foes. In 20 years you're going to meet, assuming the structure remains more or less the same, President, Premier, Minister, State Ministers, Politburo members who are completely at home will understand exactly what you say, will still negotiate with you in Chinese, but will sit down and have coffee with you or a meal with you and speak in fluent English. They probably have MBAs or PhDs from British or European American universities. That would be a very different challenge.'"
In the end, Lee noted that China's political system and culture has deep roots stretching back thousands of years, surviving even foreign rulers like the Mongols and Manchus who were unable to alter it. Lee believed China would be better off continuing with their system rather than being pressured by Western models to change. "Well, the West assumes that unless you're democratic like them, you have elections every few years and change the President or change the Prime Minister and the whole Parliament, then you cannot make progress. You're always below par, subnormal, sub-ideal. That China never had such a tradition. That China is a vast country of 1.3 billion people with a different culture, a different history they do not understand. Chinese communism is based on Chinese history and China's conditions, which are different from the Soviet Union or Eastern Europe. It is indigenous. It was local or indigenous created. Therefore, I think if I were Chinese, I'd just ignore them, carry on with what I've been doing, make my people better, make my country stronger, make my country more prosperous."
Since Lee's passing, China has made remarkable progress addressing many of his concerns: combating corruption, fostering innovation, and reforming state-owned enterprises. Having witnessed the Chinese people's immense ambition and drive, Lee recognized that as China advances, it will soon become a model that many countries look to emulate and learn from. "In 50 to 100 years, 50, 70 something years, you will be like Japan or America, and we will be learning from you because you will discover new things. You've already sent a man into space. Nobody gave you any secrets. You worked it out from first principles, so you can do these things. So what do we do? I think we accept that in 50, 60, 70 years, we are learning from you."
Amid the current escalating tensions over global dominance and trade, Lee's vision of a new world order is unfolding. The historic shift of power from West to East signals the end of centuries-long Western dominance and the rise of China as a central global leader. Lee emphasized that the West's ability to adapt to this new reality will be crucial, as he warned: "By the next century, you have to realize either you coexist or you destroy each other. It's a watershed. I mean, the world order that we knew was dominated by the Caucasian peoples, Europe, technology, sailing ships, then aircraft. They conquered the world. Industrialization. Globalization. Well, industrialization first, and then they globalized it. And America is the extension of Europe with a difference in that she's more embracing of other races. The 20th century was the American century. The first half of the 21st century, or a large part of it, will still be the American. But I believe the second half, you have to share top places with China and also with India and make space for them too."