From Third World to First The Singapore Story pdfdrive com

Zhuang
Yuan
was the title given to the candidate who came first in the imperial
examinations that used to be held in the capital city once every three years.
Suzhou leaders proudly claim that quite a number of them came from that street.
Although I had been well-briefed, Jiang was a surprise. I had not expected so

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extrovert a Chinese communist leader. When Jiang spent two weeks in
Singapore in 1980, Ng Pock Too, an EDB director, was his liaison officer. After
Jiang was made general secretary, Ng gave me a thumbnail sketch. He was
surprised Jiang had been placed in this top position. He remembered him as a
serious, hardworking, conscientious and thorough official: Jiang would study
every problem in detail, take notes and ask searching questions. Ng thought
highly of him because, unlike other Chinese officials who stayed in five-star
hotels, Jiang chose a three-star hotel off fashionable Orchard Road. He travelled
modestly – in Ng’s car, by taxi or on foot. Jiang was a thrifty, honest official, but
did not appear to be a political animal.
Towards the end of the two weeks, Jiang had looked Ng Pock Too in the eye
and said, “You have not told me everything. You must have a secret. China has
cheaper land, cheaper water, cheaper power, cheaper labour. Yet you get so
many investments and we don’t. What is the secret formula?” Nonplussed, Ng
explained the key importance of political confidence and economic productivity.
He pulled out his copy of the Business Environment Risk Index (BERI) report,
and pointed out Singapore’s rating as 1A on a scale of 1A down to 3C. China
was not even included in the rating. Singapore was safe and favoured for
investments because of political, economic and other factors. There was no
danger of confiscation. Our workers were industrious and productive, and there
were minimal strikes. Our currency was convertible. He went through the BERI
measurements. Jiang was not altogether convinced, so Ng gave him the BERI
report to take home. They had a summing-up discussion in Jiang’s small hotel
room before they left for the airport. Jiang finally said he understood the magic
formula, that the EDB had the “unique knowhow to sell confidence”! Ng
concluded, “I never thought he would be the No. 1 man in China. He was too
nice.”
Our personal chemistry was good. Jiang was gregarious. I was open and
direct. Whereas with Li Peng I had to be careful not to speak even half in jest,
Jiang knew I meant well and did not take offence. He also had a very un-Chinese
habit of holding his guest’s forearm and looking him earnestly in the eye when
he asked a direct question. His eyes were his lie detector. I assumed he must
have been satisfied that I was not being evasive when he asked some very
probing questions about Taiwan, America and the West, and about China itself.
Personal chemistry does make a difference to the ease with which business
can be done on difficult and sensitive issues. I could not have talked as freely
with either Hua Guofeng or Li Peng as I did with Jiang Zemin. It might have

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been possible with Zhao Ziyang, but not in the same free-ranging manner.
Many, myself included, underrated Jiang’s staying power because of his
bonhomie and his penchant for quoting poetry at every opportunity. But there
must be the tough infighter side of him which his opponents would have
discovered to their cost when they thwarted him. There is no question about his
integrity and dedication to the high cause placed upon him by Deng Xiaoping, to
carry China’s modernisation forward and make China a prosperous, industrial
society with “a socialist market economy”. He explained its meaning to me at
some length, that China had to be different from a Western free-market economy
because the Chinese were socialists.
When I met Jiang again two years later, in October 1992, we talked about the
international situation. It was a few weeks before the US elections. I suggested
China would need to buy time for itself if Clinton won. He should give Clinton
room to manoeuvre and do a U-turn on some of his policies, like China’s Most
Favoured Nation status, to avoid a head-on confrontation. A new, young
president eager to show his supporters that he was ready to live up to his election
speeches could result in problems for both China and America.
Jiang listened. He answered indirectly. He had read my speeches, those
delivered in China and elsewhere. During Deng’s tour of the southern provinces
in January that year, Deng had referred to the rapid development of Southeast
Asia and especially Singapore. The 14th party congress to be held the following
month would carry out Deng’s policy of “socialism with Chinese
characteristics”. For this, China needed a peaceful and stable international and
internal environment. The market economy would expand in China but would
take a long time. As for democracy for China, the East had been influenced by
the teachings of Confucius and Mencius. Any “shock treatment” (of sudden
democracy) for China, like that on the Soviet Union, was out. As for the present
unhappy state of US-China relations, the fault was not China’s. By selling
fighter planes and weapons to Taiwan, America had violated the principles of
the 1982 communiqué agreed between China and the United States. But China
had not made a big issue of it because it did not want to embarrass President
Bush during his election campaign.
He described China’s economic situation. Then he asked me what would be
the most satisfactory rate of GNP growth for China. Their previous target was 6
per cent. In the next congress, their proposed target was 8 or 9 per cent. The four
Little Dragons and Japan, I replied, had achieved double-digit growth with little
inflation for sustained periods during the early phases of their industrialisation.

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Before the oil crisis, Singapore had achieved 12–14 per cent growth rates with
little inflation. The optimum rate of growth for Singapore did not depend on any
magic figure, but on how much of our labour and production capacity was
under-used and also on our rates of interest and inflation. I added that Dr Goh
Keng Swee (my former finance minister, who had been advising the Chinese on
their special economic zones) believed China’s most important problem was the
inability of the People’s Bank of China (PBOC), their central bank, to control
credit. Each PBOC branch in the provinces responded to pressure from
provincial governments when creating credit. Furthermore, data on money
supply at any given time was insufficient. China had to control money supply to
keep inflation under control, and not allow the provincial branches of the PBOC
to create credit without the knowledge and permission of the central bank.
He made a note of this. He said he had graduated as an electrical engineer
but had begun to learn economics and was reading the works of Adam Smith,
Paul Samuelson and Milton Friedman. He was not the only Chinese leader
studying market economics. I advised him to study the workings of the US
Federal Reserve Bank and the German Bundesbank, two successful central
banks. Of the two, the Bundesbank had been more successful in fighting
inflation. The chairman of the Bundesbank was appointed by the chancellor, but
once appointed he had independence and the chancellor could not order him to
increase money supply or lower interest rates. China must get credit creation
under control and not be over-concerned about not exceeding a putative ideal
rate of growth. For example, if Guangdong province could grow faster than other
provinces because of inputs from Hong Kong, then he should let it do so, and
encourage that growth to spread to neighbouring provinces through improved
road, rail, air, river and sea transportation. He said he would study these points.
When I next met Jiang in Beijing in May 1993 he thanked me for having
facilitated the Wang-Koo talks in Singapore between “unofficial” representatives
of China and Taiwan. It was the first time since 1949 that the two sides of the
civil war had met, albeit “unofficially”. Jiang said, however, that he felt “very
strange and disappointed” with the numerous reports that Taiwan wanted to join
the UN. He thought it was unwise for the West to treat China as a potential
enemy.
I said that Taiwan’s push to join the UN was not encouraged by the United
States. Dick Cheney, the former US secretary for defence under Reagan until
1992, and Jeanne Kirkpatrick, the former US permanent representative to the
UN, also under Reagan, had said in Taipei recently that it was not realistic for

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Taiwan to join the UN, that Taiwan could join UNESCO, the World Bank, and
other technical organisations, but not the UN itself. I believed Taiwan’s wish to
join the UN was a passing phase with President Lee Teng-hui, who wanted to
break away from the old KMT position, which was not to join any international
body because Taiwan was not a full member of the UN. (I was to discover later
that I was wrong; it was not a passing phase. Lee Teng-hui really hoped to join
the UN and to assert Taiwan’s separateness as the Republic of China on
Taiwan.)
The best outcome of China-Taiwan relations, I believed, was a peaceful and
gradual interlocking of economic, social and political relations between the two.
For example, in 1958 the mainland had exchanged artillery fire with Taiwan
across the narrow Straits of Quemoy and Matsu. If China had succeeded in
reuniting with Taiwan then, China would now be in a less advantageous
position. Because it did not, it could now tap the resources of some 20 million
Taiwanese who had acquired economic and technological assets through their
association with America. He nodded in agreement. Would it not be better to
have Taiwan carry on as a separate entity, I suggested. Then America and
Europe would continue to let Taiwan have access to their technology and
knowhow for another 40 to 50 years, and China could benefit further from what
Taiwan could put into the mainland. He shook his head in disagreement.
I next argued that if he wanted the United States to have less leverage, he
should open up China to more European MNCs. Then American businessmen
would lobby their government against actions that jeopardised their interests in
China for fear of losing out to European and Japanese MNCs. He thought this a
good point. I added that America and Europe could not tolerate another
Japanese-style closed-market economy in a China that only exported and did not
import. For China to develop, it must use its potentially huge market to attract
foreign investments which can sell their products in China and thus “lock them
into China’s growth”. Jiang agreed that as a big country it was not realistic to
have a wholly export-oriented economy. China must increase its exports, but not
to the United States alone, and China had to develop an open market. He agreed
more with the view of Vice-Premier Li Lanqing (in charge of trade) than with
that of Vice-Premier Zhu Rongji (in charge of industries). Zhu held the view that
local industries must have a certain degree of protection. Jiang said China’s
policy was to learn from various countries and pick up their strong points, not
only in knowhow, science and technology but also in cultural experience.
One animated meeting I had with Jiang was in October 1994, about Taiwan.

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Earlier that year, in May, Taiwan’s President Lee Teng-hui had stopped over in
Singapore to ask Prime Minister Goh to convey a proposal to President Jiang.
This was to set up an international shipping company, to be jointly owned by the
PRC, Taiwan and Singapore (with only a nominal Singapore shareholding), to
handle trade between China and Taiwan. All ships trading with the PRC would
be put under this company.
Goh had written to Jiang to convey the proposal. Jiang had not accepted it.
Then Goh and I had decided to put up a Singapore proposal to bridge the gulf
between the two, by forming a company for both shipping and airline, to be
registered in Singapore and jointly owned by the PRC, Taiwan and Singapore in
more or less equal shares. This company would wet-charter ships and aircraft
(lease ships and aircraft with their full crew complement) in equal numbers from
China and Taiwan. After three years, the two would buy out Singapore’s share.
President Lee had agreed to this proposal when we met in Taiwan in mid-
September 1994.
I met Jiang a few days later, on 6 October, in the Great Hall of the People.
He proposed that we talk in a small group, he with his deputy director, state
council (Taiwan affairs), I with our ambassador. Jiang said, “I have an
interpreter but let us not waste time. You’ll speak in English, I can understand
you. I’ll speak in Chinese, you can understand me, and when you don’t, my
interpreter will help.” We did save time.
President Lee, I said, had agreed to our proposal but believed there would be
many difficulties in the details, so he would want Singapore to be involved in
resolving them. The Taiwanese foreign minister wanted the shipping line to start
first. They had designated a special zone at Kaohsiung as their international
transit cargo port. After it had been run successfully for a year, the airline could
start.
Jiang said Prime Minister Goh’s proposal had been made with good
intentions, but was not appropriate. There was no reason for any camouflage for
the two sides to get together. He had heard these same views from many sources.
He then referred to Lee Teng-hui’s interview with Ryotaro Shiba, published in a
Japanese magazine in April. (In it, Lee had referred to himself as Moses leading
his people out from Egypt to the Promised Land.) Jiang added that Lee’s attempt
to attend the Hiroshima Asian Games showed him as totally unreliable. Lee
wanted two Chinas, or one China and one Taiwan. The more talks there had
been, the wider the gap between them. Lee had been saying one thing and doing
another. Lee should not assume that he (Jiang) was a fool and could not read his

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true position. China’s leaders weighed their words carefully and stood by them,
he said, suggesting Taiwan’s leaders did not. China’s leaders placed great
importance on trust and righteousness, he said, implying Lee did not have these
qualities. Jiang showed anger when he said that Lee was cosying up to his
former colonial masters (meaning Japan).
He was in such full flow that even when I did not understand specific phrases
he used and only caught the gist of his meaning, I did not stop him for
clarification. He spoke with great passion, to underline the seriousness of his
position and the depth of his convictions.
At the time I did not understand his controlled anger. Later I discovered that
three days before our meeting, while I was in Henan province, President Lee had
said in the