From Third World to First The Singapore Story pdfdrive com

Asian Wall Street Journal
, “There is no leader strong enough in
Beijing, nobody able to give the final say. Deng Xiaoping is still around, but we
don’t think he is in any condition to exercise his brains. Mr Deng had tried to
establish Jiang Zemin as top leader wearing all the hats … After Mr Deng has
gone, we may find the true leader taking the stage. We don’t know if there is
someone we can see now or someone hiding who will come out.”

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40. China: To Be Rich Is Glorious
Deng Xiaoping went on a well-publicised tour of south China in February 1992.
At Shenzhen he said that Guangdong should catch up with Asia’s Four Dragons
(Hong Kong, Singapore, South Korea and Taiwan) in 20 years, not only in
economics but also in social order and social climate. China should do better
than these countries in these matters. Only then would it have the distinguishing
characteristics of Chinese socialism. Deng added, “There is good social order in
Singapore. They govern the place with discipline. We should draw from their
experience, and do even better than them.” In China, commendation from Deng
was the ultimate word on what was good.
I had told Deng over dinner in 1978 in Singapore that we, the Singapore
Chinese, were the descendants of illiterate landless peasants from Guangdong
and Fujian in south China, whereas the scholars, mandarins and literati had
stayed and left their progeny in China. There was nothing that Singapore had
done which China could not do, and do better. He stayed silent then. When I
read that he had told the Chinese people to do better than Singapore, I knew he
had taken up the challenge I quietly tossed to him that night 14 years earlier.
After Deng’s endorsement, several hundred delegations, most of them
unofficial, came from China armed with tape recorders, video cameras and
notebooks to learn from our experience. Singapore had been given the
imprimatur of their supreme leader. They put us under their microscopes and
studied those parts they considered attractive and wanted to reproduce in their
cities. I wondered what my communist adversaries of the 1960s, the Plen, the
Malayan Communist Party leader in Singapore, and Lim Chin Siong, the
communist united front leader, would say. The Chinese Communist Party had
been their source of inspiration.
China’s leaders had been troubled by the “social pollution” – proliferating
prostitution, pornography, drugs, gambling and crime – in the special economic
zones. Ideological purists criticised the wisdom of the open-door policy. Deng’s
answer was that when windows were opened, with the fresh air some flies and

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mosquitoes were bound to fly in, but they could be dealt with.
Soon after Deng’s speech, the head of the International Liaison Department
of the Chinese Communist Party asked our ambassador in Beijing if we would
brief them on “how we had maintained strong moral standards and social
discipline”. Specifically, they wanted to know “if Singapore had experienced
contradictions in the process of absorbing Western technology that was needed
to develop the economy, and how to maintain social stability”. They had been
observing us for some years. Reports had been appearing in their media
commending Singapore for its infrastructure, housing estates, cleanliness,
orderliness and greenness, its social stability and harmony, and the courtesy of
its people.
A delegation led by their vice-minister of propaganda, Xu Wei-cheng, came
for a 10-day briefing. “Vice-minister of propaganda” was a misnomer: he was
actually vice-minister of ideology. We explained our belief that social control
could not depend on discipline alone. People had to have a decent life with
reasonable housing and social amenities if they were to lead moral and upright
lives. They had to accept the basic principles of our system of government, like
obeying the law and observing their duty to help the police in the prevention and
investigation of crime.
The delegation visited all departments connected with social order – the
police (especially those sections dealing with drugs, prostitution and gambling);
the agencies in charge of censorship of undesirable videos, films, books and
magazines; newspaper offices and radio and TV stations to ask about their role
in informing and educating the public; and the NTUC and the People’s
Association to see organisations that catered to workers.
I met Xu at the end of his visit. He told me he was interested in how we had
used the free market to achieve rapid economic growth; how we had blended
Western and Eastern culture as we absorbed Western science and technology;
and, most important, how we maintained racial harmony. His delegation was
responsible for ideology and wanted to learn how to eradicate social vices.
We were candid about the problems we could not solve. Vices like
prostitution, gambling, drug addiction and alcoholism could only be controlled,
not eradicated. Singapore’s history as a seaport meant prostitution had to be
managed and confined to certain areas of the city where the women were given
regular health checks. Gambling was impossible to suppress. It was an addiction
Chinese migrants had carried with them wherever they settled. But we had
eliminated the triads or secret societies and broken up organised crime.

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As for corruption, Xu expressed his doubts whether agencies like
Singapore’s Corrupt Practices Investigation Bureau and the commercial affairs
department could deal with the large “grey areas” in a society like China where
guanxi
(personal relationships) was all-pervasive. The definition of corruption in
China was different. Moreover, he stressed, the party was supreme and the
cadres could only be disciplined internally within the party. (This meant that
some 60 million party members are not subject to the ordinary law of the land of
China. Since then several very senior party cadres have been sentenced to death
for smuggling, and others to long prison terms for corruption. But the party
leaders can intervene and reverse judicial decisions.) Xu said that not all
Singapore’s methods could be replicated as China’s system was very different.
Perhaps small new cities like Shenzhen could usefully follow Singapore’s
experience. China would always remain socialist. Their only way was to try out
policies one at a time, for unlike Singapore, China had to adapt its policies to
differing conditions in its 30 provinces.
He was struck by our clean and efficient administration. How had we
preserved the people’s social and moral values? All we did, I replied, was to
reinforce the cultural assets the people had, their inherited values and sense of
right and wrong. Confucian virtues like being filial to one’s parents, honest and
upright, hardworking and thrifty, sincere to one’s friends and loyal to the country
were important supports for the legal system. We reinforced these traditional
values by rewarding behaviour that conformed to them and punishing contrary
behaviour. At the same time, we set out to eradicate weaknesses like nepotism,
favouritism and corruption, which were the dark side of Chinese Confucianism –
the obligation to help one’s family. Singapore is a compact society and its
leaders had to set the example in honesty and upright conduct. We considered it
vital that the people feel confident the government would not cheat or harm
them. Then, however unpopular government policies might be, the people
accepted that they were not the result of immorality, nepotism or corruption.
Xu asked how a government should deal with foreign influences out to
change a country’s internal system. The problem, I said, was not foreigners
directly interfering with our internal policies, but indirectly and insidiously,
through their media and through personal contact, influencing and changing our
people’s attitudes and behaviour. This would become increasingly difficult to
control because satellite broadcasting technology would improve. We could only
mitigate the harm to our social fabric by inculcating and strengthening the
traditional values of our people. The family, I believed, had the greatest

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influence on a child’s values in the first 12 to 15 years of his life. Sound values if
rooted early in life could later resist contrary influences and pressures. Roman
Catholic priests, if entrusted with a child for the first 12 years of his life, could
usually ensure the child would remain Catholic for life.
When the delegation returned to China, their report was circulated as
“Reference News” and read by party cadres. In a paperback published to give an
account of Singapore, Xu quoted what he considered summed up my approach:
“It requires prolonged efforts to administer a country well, and to change the
backward habits of the people; a certain amount of administrative pressure is
necessary at the beginning, but what is most important is education.” Li
Ruihuan, the politburo member in charge of ideology, told me when I visited
Beijing a year later that he had initiated the study mission. He had visited
Singapore when he was mayor of Tianjin, and considered it worth studying.
Another area they were interested in was our legal system. Qiao Shi,
chairman of the National People’s Congress standing committee and third-
ranking leader of China, was also responsible for settling the necessary
legislation to establish the rule of law. He visited Singapore in July 1993 to
study our laws. The Chinese communist leaders, he said, had abolished all
existing laws when they promulgated the People’s Republic of China on 1
October 1949. Thereafter, they had governed by edicts. Party policies became
the law. Only after Deng Xiaoping’s open-door policy did they recognise the
need for laws to govern commercial relations. Qiao Shi said no one would
cooperate with China if it was seen as unstable and fractured. China needed the
rule of law to maintain long-term stability. I said China should be able to get a
system of laws established in 20 to 30 years, but it would take longer for people
as a whole to accept the rule of law and act in accordance with it. He replied that
not everyone had to understand it. As long as the top people practised it, the rule
of law would work. He came across as a serious man who had thought through
his problems.
China under Deng was more open and willing to learn from the world than it
had been for centuries. Deng was courageous and strong enough in the party and
the nation to admit openly that China had lost many years in pursuit of a
revolutionary utopia. It was a refreshing time of open minds and enthusiastic
progress, a radical change from the years of wild slogans and disastrous
campaigns. Deng initiated the fundamental changes that laid the foundations for
China to catch up with the rest of the world.

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In September 1992, together with Deputy Prime Minister Ong Teng Cheong,
I visited Suzhou, China’s Venice. It was in a dilapidated condition, with its
canals filthy and polluted. But it struck us that we could redevelop Suzhou, make
it into a beautiful city, and build a new industrial and commercial section next to
it. It had beautiful Chinese gardens built around villas so that every window and
every veranda looked out on to rockery, water and plants. Traces of its old
grandeur could still be seen in some of the mansions that had been restored.
Suzhou’s mayor, Zhang Xinsheng, drew me aside after lunch one day to say,
“Singapore has US$50 billion in reserves.” “Who told you that?” I asked. He
had read it in World Bank reports. He added, “Why don’t you invest 10 per cent
of it in Suzhou? Get us industrialised like Singapore? I will guarantee you
special treatment so that your investments will succeed.” I said, “Able and
energetic mayors soon get promoted; then what?” He paused and replied, “Well,
you may have trouble with my successor, but after a while he will have no
choice but to go along the route that I would have laid down. People in Suzhou
want what they have seen of Singapore on television and in the newspapers –
jobs, housing and a garden city.” I replied, “You have no power to give us a
fresh site on which we can build a miniature Singapore. You need the central
government’s authority to do that.”
I gave no more thought to this. That December, he turned up at my office to
say he had approached Deng Xiaoping’s office with his proposition. There was a
good chance it would go through. Could I put up the proposal in a plan? He was
close to Deng Xiaoping’s son, Deng Pufang. So Ong Teng Cheong did some
artist’s impressions of what old Suzhou could be like after restoration, with a
modern industrial township next to it. A few months later, when Deng Pufang
visited Singapore, I showed him sketch plans of a restored city together with an
adjoining new industrial township. He was enthusiastic. His input through his
father’s office gave this project a push. When Prime Minister Goh visited
Beijing in April, he discussed the proposal with Premier Li Peng and Jiang
Zemin.
In May 1993 I met Vice-Premier Zhu Rongji in Shanghai. I had earlier
written to him on the Suzhou project. I explained my proposal for cooperation: a
government-to-government technical assistance agreement to transfer our
knowledge and experience (what we called “software”) in attracting investments
and building industrial estates, complete with housing and commercial centres,
to an unbuilt site of about 100 square kilometres in Suzhou. This would be
backed by a business consortium of Singapore and foreign companies in a joint

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venture with Suzhou authorities. The project would take more than 20 years to
complete, and there would be difficulties adapting our methods to the different
conditions of China.
At first Zhu thought my proposal was another money-making idea on behalf
of our investors. I explained that my proposal was in response to many
delegations that had come from China to study us in a piecemeal manner but
would never understand how our system worked. With Singapore and Chinese
managers working together side by side, we could transfer our methods, systems
and knowhow. Zhu agreed it was worth trying. He pointed out that Suzhou had
access to the Yangtze River and was near Shanghai (90 kilometres to the west),
China’s largest international centre.
Four days later I met newly promoted Vice-Premier Li Lanqing in Beijing.
He was from Jiangsu province, born in a town not far from Suzhou. He fully
supported the project because Suzhou had high-quality people and could absorb
and adapt Singapore’s experience. Li said Singapore-China cooperation had the
advantages of a common culture, tradition and language. A pragmatist, he
acknowledged that the project must be economically viable and yield a
reasonable return. When he was vice-mayor of Tianjin, his basic principle for
cooperation had been “equality and mutual benefit”.
Beijing sent two delegations in October 1993 to study Singapore’s system –
one from the state council, the other from Jiangsu province. Only after they were
satisfied that parts of our system were suitable for China did they agree to this
“software transfer”.
In February 1994 I signed the Suzhou Agreement with Vice-Premier Li
Lanqing in Beijing, witnessed by Premier Li Peng and Prime Minister Goh. I
met Jiang Zemin to confirm that the work in Suzhou would start soon but would
take more than 10 years to reach a significant level of development. Jurong
Industrial Township in Singapore, only 60 square kilometres, had taken us 30
years.
The project, Suzhou Industrial Park (SIP), took off with great enthusiasm on
both sides, but we soon ran into difficulties. There was a divergence of
objectives between the centre (Beijing) and the locals (Suzhou). The top leaders
in Beijing knew that the essence of the project was to transfer our knowledge of
how to plan, build and administer a comprehensive industrial, commercial and
residential park which could attract high-quality foreign investors. The officials
in Suzhou moved away from this core objective and were sidetracked by their
parochial interests. We wanted to show them how to do things the Singapore

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way, with our emphasis on financial discipline, long-term master planning and
continuing service to investors – our software. They wanted the “hardware” –
the buildings, roads and infrastructure which we could build and the high-value
investments we could attract using our worldwide connections and reputation.
They were not focused on learning how to create a pro-business climate; nor did
they select their most promising officials to be trained to take over from us.
“Hardware” brought direct and immediate benefits to Suzhou and credit to its
officials; Beijing wanted “software” so as to spread its benefits to other cities
through adopting Singapore’s pro-business practices.
Instead of giving SIP their full attention and cooperation as was promised,
they used their association with Singapore to promote their own industrial estate,
Suzhou New District (SND), undercutting SIP in land and infrastructure costs,
which they controlled. This made SIP less attractive than SND. Fortunately,
many of the large MNCs valued our interface and chose SIP in spite of its higher
land costs. Hence, despite these difficulties, SIP made significant progress and
within three years had attracted over 100 projects with a total investment
commitment of almost US$3 billion. It ranked top in China in terms of the
average value of each investment project. These projects would create over
20,000 jobs, 35 per cent of which would be for the tertiary-educated. The
chairman of the Office of the Special Economic Zone commented that “in
merely three years from inception, SIP’s speed of development and the overall
standard are first-class in China”.
This progress was made in the face of increasing difficulties. The rivalry
between SND and SIP confused potential investors and diverted the attention of
the Suzhou officials from the objective of software transfer. Things came to a
head in mid-1997 when the vice-mayor of Suzhou, who ran SND, told a meeting
of German investors in Hamburg that President Jiang did not support SIP, that
they were welcome to SND and did not need Singapore. This made our position
untenable. We were wasting too much time, energy and resources fighting with
the local authorities.
I raised the problem with President Jiang in December 1997. He assured me
that SIP remained his top priority and that the problems at the local level would
be resolved. But notwithstanding this assurance from the very top in Beijing,
Suzhou did not stop promoting SND in competition against SIP. We had reasons
to believe they had borrowed so heavily that to stop promoting SND would
cause severe financial difficulties. After much discussion we agreed in June
1999 that there would be a change in responsibilities in the existing joint venture

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between the Singapore consortium and the Suzhou authorities. The Singapore
consortium would remain the majority partner in control of the project and
complete the first 8 square kilometres by the end of the year 2000; the Suzhou
authorities would then take over majority partnership, control the project and
complete the rest of the 70 square kilometres using the first 8 square kilometres
as a reference model. We would remain for at least a further three years until
2003 as minority partners and help guide a Chinese management team in
servicing investors in SIP.
It was a chastening experience. Both sides had believed that because of
apparent language and cultural similarities there would be fewer problems in
dealing with each other – each side expected the other to behave like itself.
Unfortunately, while language was no problem, our business cultures were
totally different. Singaporeans take for granted the sanctity of contracts. When
we sign an agreement, it is a full and final undertaking. Any disagreement as to
the meaning of the written document is interpreted by the courts or an arbitrator.
We took great care that the documents we prepared were both in English and
Chinese, with both versions authoritative. For the Suzhou authorities, a signed
agreement is an expression of serious and sincere intent, but one that is not
necessarily comprehensive and can be altered or reinterpreted with changing
circumstances. We depended on laws and systems. They were guided by official
directives; often these were not published and their interpretation varied with the
official in charge.
For example, power supply. Although the Suzhou government had in a
written agreement promised to provide a certain quantity of electricity, it failed
to get the relevant authority to deliver on its promise. To resolve this, we got the
Suzhou government’s permission to build a diesel power plant. After the plant
was built, we were told that diesel plants were discouraged by the power
authority and were prohibited from operating it. The municipal officials
explained that they had no control over the power authority. When they agreed
to let us install the diesel power plant, they knew the power authority had
overriding control on energy but did not tell us we needed the latter’s
concurrence. It took months of negotiation and only when the problem
threatened to shut down the park was it resolved. The five years in Suzhou
educated us on the intricacies of their multi-layered administration and flexible
business culture. We acquired a more intimate understanding of their system and
learnt how to work around its blocks and obstacles to get them finally to wrap up
our project as a partial success, not a total failure.

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China has an immensely complex government. After two centuries of decline
that began with the Qing dynasty, China’s leaders face the formidable task of
installing modern management systems and changing the mindsets and habits of
officials steeped in the traditions of the imperial mandarinate.
China is still a poor country with many backward provinces. Their domestic
problems require sustained economic growth to resolve. As China’s
development nears the point when it has enough weight to elbow its way into the
region, it will make a fateful decision – whether to be a hegemon, using its
weight to create its sphere of influence in the region for its economic and
security needs, or to continue as a good international citizen because it can
achieve better growth by observing international rules.
China has repeatedly stated that it will never become a hegemon. It is in
everyone’s interest that before that moment of choice arrives, China be given
every incentive to choose international cooperation which will absorb its
energies constructively for another 50 to 100 years. This means China must have
the economic opportunities to do this peacefully, without having to push its way
to get resources like oil, or to have access to markets for its goods and services.
There are fair and equitable rules in multilateral organisations like the WTO for
a free exchange of goods and services so that each country can stay within its
borders and improve its people’s wellbeing through trade, investments and other
exchanges. This was the way the Germans and the Japanese were able to rebuild
after World War II. Their territories shrank even as they had to receive back
their nationals expelled from territories they had occupied and colonised.
Despite smaller territories and reduced natural resources, both flourished as
never before because they had access to markets through the IMF and GATT. If
such a route is not open to China, the world must live with a pushy China. In that
event the United States will not be alone in being concerned about what China
will do when it is able to contest the present world order settled by America and
its partners in Europe.
The Chinese Communist Party faces a profound challenge. Communism has
failed worldwide and the people of China know it. But the CCP has not failed. It
has liberated China, unified it and enabled the people to feed and clothe
themselves. Despite the disasters of the Great Leap Forward (1958) and the
Cultural Revolution (1966–76), the Chinese are proud that foreigners can no
longer violate China’s sovereignty with impunity as they did when they

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exercised extraterritorial rights in the foreign concessions.
I had an interesting sample of the rapid change in China when in September
1994 I arrived at Zhengzhou Airport in the inland province of Henan. A line of
their old Red Flag limousines was waiting. I knew Henan was not as prosperous
as the coastal provinces but had not expected them to be still using the Red Flag
limousines. To my surprise, they ushered me and the party secretary, Li
Changchun, to a brand new Mercedes 600. I was intrigued to hear the familiar
way in which he and the driver conversed with each other. Later, when I was
alone with the driver, I asked how much he earned as a driver. He replied that he
was really the owner of the car. Party Secretary Li had wanted to borrow it for
my visit and he decided to drive it to meet me. Six years ago, he was a
supervisor in a factory, but after Deng’s exhortation to get rich, he had gone into
business. He now had three factories employing some 5,000 workers assembling
electronic products. He owned three cars including this Mercedes 600. China
was changing fast and irrevocably.
The government and the CCP are also changing, but not as fast as the
economy and society. To demonstrate popular support, the CCP has allowed
elections at village and county levels. In provincial elections for high officials,
Communist Party members who have not been nominated by the party can stand
against the official candidates. The governor of Zhejiang province in 1994 was a
candidate who had defeated the Communist Party nominee. The legitimacy of
the CCP now rests upon the benefits that Deng Xiaoping’s reforms, initiated in
1978, have brought to the farmers and workers: more food, clothing, homes and
consumer goods – and more wealth than they ever had. But the people also know
that the Chinese in Taiwan, Hong Kong and Macao have done better than the
mainland Chinese because they have free markets. As long as the CCP can
produce results and improve the people’s lives, its legitimacy will not be
challenged. This could go on for another generation. The CCP policy is to
absorb the brightest and the best into the party. Many have joined to avoid the
disadvantages of not being a member, but the study of Marxist-Leninist-Maoist
theories by party cadres is perfunctory.
In the next 50 years, the Chinese will have to complete three transitions:
from a planned to a market economy, from a rural to an urban base, from a
tightly controlled communist society to an open civic one. Several factors can
derail China from its present track of catching up with the industrial nations. The
first and most important is Taiwan. If Chinese leaders feel that Taiwan is going
to go independent and could be lost, they will not be so detached and calculating

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and could act with unpredictable consequences. The next factor is rapid
urbanisation. At present, 30–35 per cent of the 1.3 billion Chinese live in small
towns and cities. By 2050 they will be 80 per cent, well-informed and able
through electronic means to mobilise for mass action. They will be able to do
this with more ease than the Falungong, a cult that through the Internet organised
some 10,000 of its followers to gather peacefully in Beijing in April 1999 to
squat around Zhongnanhai, the enclave for the Communist Party leaders.
China’s political structures must allow its citizens more participation and control
over their lives or there will be pressures that could destabilise society,
especially during an economic downturn.
A third factor would be the widening differences in incomes, growth rates
and quality of life between the wealthy coastal and riverine provinces and the
disadvantaged inland provinces. However extensive the roads, railways, airfields
and other infrastructure the central government may build to bring industries,
trade, investments and tourism inland, they will still lag behind. This could
increase peasant discontent, causing serious tensions and massive migrations.
Furthermore, as more Han Chinese populate the border provinces of Tibet,
Xinjiang and Qinghai, there could be problems between them and the minority
races.
The fourth and most profound factor will be the different values and
aspirations of the next generation. The people and government want to build a
modern, strong and united China, whatever that takes. Better education and
wider global exposure will result in a people who are knowledgeable about the
world, with frequent and multiple links with their counterparts in other societies.
They will want Chinese society to be equal to other advanced countries in
standard of living, quality of life and individual freedoms. This desire is a
powerful force that the leaders are harnessing to drive the nation forward. In