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Q&A: The Way forward for the US & China


  • Asia
  • China
  • Economy
  • Opportunity


 Andrew Cornell, Managing Editor, bluenotes  |  November 2018




China and the United States are not getting along. As the effects of the trade war are felt across the globe there are growing fears the confrontation could escalate.

Singapore’s former Prime Minister and now Emeritus Senior Minister Goh Chok Tong sat down with bluenotes managing editor Andrew Cornell at ANZ’s Finance and Treasury Forum in Singapore to discuss the China-US situation and regional affairs more broadly.

In this, the second of a two-part series, we share an edited transcript the highly animated Q&A discussion. You can read ESM Goh ‘s opening address at the forum HERE

They started by addressing a scenario is which any serious confrontation with wide impact is avoided.

ESM Goh: The way to go forward will be first, I think, on the part of the US. The US has some genuine grievances about the lack of access to China’s markets for American companies; it's not quite as open as the US market is to the Chinese industries.

So the US could try and get the changes it wants through a multilateral forum like the World trade Organisation rather than using blunt power at a time when China is obviously weaker than the US.

If the US could signal a shift to reset the rules back on a multilateral basis that would take some pressure off the possibility of the trap coming true.

Second would be the behaviour of China. I think China understands a clash with the US, either now or in the future, is not in its own interest. The world needs interdependence, whether in trade or other areas including the internet.

China's behaviour is important. I think it's behaving quite well at this stage, hitting back only proportionately.

China must show it will take the world order as it is, with some modifications to suit its own interest - but not to change it like what the US is doing now.

If China could do that it would gain a lot of friends. We want a China that believes it has got a positive place in the world, a more generous China.

I don't see China trying to be the world's only superpower. It is not possible and neither is it desirable. If these two conditions come about I think there is a chance you can avoid the trap.

Cornell: You make the point China does not think US President Donald Trump is erratic or impulsive but elsewhere, implicit in your address, was even if strategically the point of view of the US administration is correct, few people would think the tactics being employed are productive.

Why would China think we don’t have someone who is not erratic or impulsive?

ESM G: Well not just China. I looked at the impulsiveness of president Trump and his erratic behaviour, as people put it and there's consistency. It suggests his instincts are there - he wants to do the things he said he would do during the election campaign.

Trump has actually implemented most of the pledges which he made during election time. That’s rare in the US - putting his pick in the Supreme Court for example. China must study Trump and say ‘the man is different’.

I think they must come to the conclusion President Trump has certain very deep convictions - for his own interest and the interest of the US.

China must take Trump's words seriously, not just as somebody who is fickle one day to another. Moreover China must look at people who are advising Trump now. I know he had different advisers but at the moment it is hardliners who seem to rule Washington.

AC: You make the point there is an opportunity here for China to gain friends, to be the rational actor. China has acted with considerable moderation apart from some of the tit-for-tat responses.

Perhaps this idea China was a different model of modern capitalism, or capitalism with Chinese characteristics, that idea probably peaked maybe a year ago or 18 months ago.

There's more wariness now –for example Chinese financial investment might have strings attached or it might be another agenda. Do you think China is the role model in this region? Is that still a current idea that could gain more credence?

ESM G: There are two parts to this. One is what China is doing with these surpluses, its economic policy outside the Belt and Road Initiative.

Yes, there's the industrial policy of China using state-owned enterprises. Many countries use state-owned enterprises in their initial stage of development. We did too in Singapore.

But after a while, in Singapore, we had a small market and had to go outside. State-owned enterprises lacked the market discipline and market intuition and initiative. We changed our model.

China uses state-owned enterprises to grow their economy. That model could appeal to economies like Vietnam. They look at how China developed with SOEs and industrial policies and see this as a model for themselves. And in industrialising they might subsidise.

They may subsidise internally and if possible even subsidise the exports. This is where the US has got an actual grievance - if they subsidise their exports and we do not, then how do we compete?

The other part would be China's strategy of gaining influence. The Belt and Road is conceptually a very good scheme for all. It means, basically, connecting cities and different countries into one huge network. It's not just benefiting China, it benefits both sides, both countries.

But somebody has got to finance it. And it is good if China does it right, based on the actual feasibility of the project. In China's case, they left many things to their companies and I think some players got out of hand.

They invested heavily and if they cannot get repayments for the loans, what do they do? They would take over the projects, like the port in Sri Lanka.

I don't know how much of this is directed by a strategist in Beijing with the intention to trap all these countries in debt and have influence over them. I don’t think so.

I think it's more likely a commercial decision but people say, ‘oh, so many countries have been trapped by these loans from China’. But if it's done well it's beneficial to those countries which need capital and infrastructure.

If they go into projects which are not economically viable then China will simply be taking over the country's problems - what is called debt diplomacy.

I believe China will learn. It will learn to implement the BRI in a more-successful way. If not the BRI will not be sustainable. 

AC: A question from the floor: How do Trump and Chinese President Xi Jinping define success?

This is interesting in the light of your comments that, when you were in the government, Deng Xiaoping talked about a hundred-year plan for success. Do you think Xi is of that model, of the Deng model?

Or does he have some characteristics that are more like Trump in the sense of it's a personal definition of success?

ESM G: I have had the good fortune to sit at that discussion with Deng Xiaoping. So, I have some feel. President Trump, I have not met him, so I do not have that feel.

President Xi is not entirely like Deng. Deng had this knowledge of the past and what he wanted to do for China in the future.

I think President Xi has some of those qualities but perhaps not the same sweep of Deng Xiaoping. He has his China Dream, which, to me, is trying to make China great again There are some similarities but they belonged to two different historical periods.

AC: Countries inevitably have to make some kind of choice. When elephants fight it's the smaller animals that must be wary. How do you make those sorts of decisions?

ESM G: Well, we in Singapore, and I think that applies to other countries too, must always make decisions based on your own national interests. In our case, they would be the security and economic growth of the country.

Let's use as an illustration this real trade war between China and US. We should ask ourselves ‘Where's my market? Who will be investing in my country? Whose banks can we work better with?’

You make a calculation. If you're forced to choose between black and white then you have no choice but to make the calculations.

At this stage of course it is very clear our interest, if we had to choose, is with the US. Technology, markets, investments and so on. That's on the economic side.

Fortunately we do not have to make a choice yet. Then the other choice you'll have to make will be the defence situation between the two - whose side are you on? That's quite difficult. Again, you probably side with your own immediate interest. Your own security.

The question smaller countries like us will ask is ‘who is better for us in terms of national security?’

At this stage it's quite clear as far as Singapore is concerned the US is the better guarantor of security in the region.

China doesn’t have the American reach. China cannot in any way secure Singapore's interests. The US can.

Weapons for example ... we buy from the US. You don't buy your fighters from China or your missiles or whatever from China. It's the US.

If we are not on the side of the US, the US denies us those weapons, well, how can we defend ourselves? So, this applies to other countries as well.

Your own security. Your own economic prosperity. And I would add your own values and principles.

As far as Singapore is concerned, we would always stick to this national interest and principles. And we had from time to time had disagreements with the US and China when we took a principled stand on issues.

AC: Singapore's only had three prime ministers ... three prime ministers barely gets Australia through one year.

We're coming into the time when succession is being discussed in Singapore. Will the next prime minister need to be a different kind of person to Lee Kuan Yew or yourself or the current prime minister?



"I think China understands a clash with the US, either now or in the future, is not in its own interest.”


ESM G: I think each prime minister must be different from the earlier one. Before I took over as Prime Minister, Lee Kuan Yew gave me a book, Machiavelli’s The Prince.

He said, "read this. If you want to govern Singapore, read this." Well I read it. I told myself, "no, I'm not Lee Kuan Yew." I can't govern Singapore like him. I never told him that but that was what I told myself. It's different times and different personality.

Lee Kuan Yew believed to govern you must be feared. You must come across as totally in charge. Brook no fundamental disagreements. But times have changed and personality wise I am very different from Lee Kuan Yew. The electorate has also changed. So, I governed in my own style.

I have a book coming up. I think I've succeeded as the PM. If I have not succeeded, I would not dare publish that book. Similarly PM Lee Hsien Loong is different from me. I will say he is somewhere between me and Lee Kuan Yew.

The fourth prime minister must understand the times. What is it that people need? It's not just following what the people want. But you understand what the people need, the changes in society, and then you govern in your style to win their trust.

The next prime minister cannot govern Singapore like Lee Hsien Loong or like me. I think it depends on what the prevailing world is like and the challenges Singapore is facing.

AC: Can you tell us about your forthcoming book?

ESM G: It's an authorised biography. I did not believe in writing my own memoirs because I thought it would be prejudiced.

You will say only good things about yourself. In this book, negative things about me are in because they're said by other people about me. And I allowed it. It must be a genuine book, covering both sides. So I put them all in.

Secondly, before I became prime minister I said ‘don't take notes.’ Each time I have a conversation with you, I don't put it down in a diary. I want it to be free. Had I planned to write a memoir, I would be taking notes seriously. So I could quote from everybody and everything of interest.

AC: I'm assuming then we've got something a bit like Bob Woodward's Fear: Trump in the White House. A Singapore version of that?

ESM G: (laughter) No. No. I think this book basically is to tell my journey from being somebody who was not interested in politics.

When I graduated I wanted to be an academic - hopefully, one day to be a professor at the local university. I was not allowed to do that because I was bonded to serve the government.

I was on a government bursary in the university so I joined the civil service after I graduated. After that I joined the national shipping line and later on I was asked to enter politics.

I was not being prepared to join politics. But I was spotted, together with a few others of my generation, to enter politics for the key reason to keep Singapore going after Lee Kuan Yew.

Lee was only in his fifties but he felt Singapore must carry on without him. So, we understood, my colleagues and I. We learned to become politicians. We could govern, no doubt about it, but could we win elections?

The answer was, at the start, probably not. And Lee Kuan Yew and his colleagues thought we could not win elections initially too. But we learnt how to.

So the book is about the journey from somebody who was not directly interested in politics, how I was changed and transformed as a person, working under Lee Kuan Yew.

The book will tell you I was reprimanded by Lee Kuan Yew several times. He was like my kung fu master. If you are a disciple of a master, surely you must be slapped a few times, isn't that so?

You can't be such a good student the kung fu master never kicks you a few times. It's all in the book.

AC: You talk about that leadership journey and earlier you were speaking geopolitically about how countries must be true to their values. The kind of advice you're talking about for nations, does it apply to how companies work as well?

ESM G: I would say yes. I would tell you how we tried and built the Singapore cabinet. I would say there were three very important values: honesty, compassion, and meritocracy.

We would choose to form a cabinet with honest people, compassionate people and on the basis of ability. If you can succeed in that it means you get the best team to serve the country.

That applies to any organisation. Surely you must get people who are honest and of course on the basis of ability. That's a meritocracy. You can't be recruiting people just from your own families or your own school ... old school ties and so on. People based on ability.

On compassion more and more companies understand they have a corporate social responsibility to be compassionate. I hope it's not just donating money. It's actually taking interest in the way you can make a difference, and to enable employees to volunteer for social work.

I think the three qualities are the same as those for government.

Trust and reliability are important too. I am concerned the US is losing their moral leadership. Trust, reliability and respect for your company must be valued. Without that you're not going to get clients.

AC: Now we're talking about companies must have a social license to operate. There's scepticism from some who say the business of companies is shareholders and nothing else but do you see the role of organisations as broader than that?

ESM G: Oh, of course. I think any company must serve primarily, society first. This is the larger context. If you only serve the shareholders, you're exploiting the community or society to benefit yourself.

Then the government must step in and not allow you to do so. You're exploiting the people.

If I were in charge of the country and I see a company that's exploiting the people, maximising returns for the shareholders but at the expense of society, I would think of regulations to prevent that company doing so.

For example, having a monopoly is in a sense exploiting. So, governments must prevent that.



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