Sunday, October 3, 2010

The dragon and the little red dot

Oct 2, 2010

By Clarissa Oon

GIVEN the robust bilateral relationship today, it is hard to imagine that Singapore was one of the last Asean countries to establish diplomatic ties with China.

Long after Malaysia, Thailand and the Philippines exchanged diplomats with the People's Republic of China in the mid-1970s, Singapore and China finally formalised their ties on Oct 3, 1990.

Singapore waited until its populous neighbour Indonesia restored the diplomatic ties with China that had been suspended since 1967. In August 1990, Jakarta normalised relations with Beijing.

When Brunei followed suit in 1991, China finally had full relations with the then six-member Asean bloc, reversing the hostilities of the Cold War years when it backed communist movements against South-east Asian governments.

Tomorrow, China and Singapore mark the 20th anniversary of bilateral ties. However, the thaw in relations had actually begun more than 20 years ago, with an exchange of high-level visits.

In 1976, at the tail end of the Mao Zedong era, then prime minister Lee Kuan Yew paid his first visit to China. His second was in 1980, as China began eschewing ideological battles in favour of opening up its economy. In 1978, China's paramount leader Deng Xiaoping visited Singapore.

In the early 1990s, Mr Deng's public praise for Singapore's economic and social development, coupled with Singapore leaders' recognition that a future giant economic power was stirring, set the stage for a landmark joint venture.

That was the Suzhou Industrial Park (SIP) - an industrial estate in eastern China's Suzhou. Launched in 1994, the flagship bilateral project took off after initial difficulties.

Whether in economics, education, technology or tourism, relations have since gone from strength to strength. Last year, China was Singapore's second largest trading partner with total trade amounting to $75.7 billion, while Singapore was China's ninth largest trading partner.

How did the relationship between a mini-state and a continental power evolve? What does the future hold? To mark the occasion, old China hands from Singapore share their experiences and thoughts with Insight.

Impact of Dr Goh and MM Lee

ECONOMIST and China scholar John Wong received an unexpected offer from Dr Goh Keng Swee in 1990.

Singapore's economic architect had by then retired from politics, and was an adviser to the Chinese government on how to further open up the economies of its coastal cities.

During the 1980s, the Singapore Government was interested in Confucianism as a way of introducing Asian values to an increasingly Westernised younger generation. As First Deputy Prime Minister, Dr Goh founded the Institute of East Asian Philosophies in 1983 for the study of classical Chinese philosophy.

But after being exposed to developments in China from the mid-1980s, Dr Goh decided to shift the focus to the country's politics and economics. He hired Professor Wong, then an economist at the National University of Singapore, to be the new director.

He prophetically told Prof Wong: 'After Tiananmen, China is now in a mess. But I think Deng Xiaoping is going to clean it up. He will go for more reform, not less, because there is no turning back for him and China. They will eventually make it and what they do will soon affect us all in the region.'

That was how the Institute of East Asian Political Economy came into being in 1992. Now known as the East Asian Institute, it was the first - and still the only - China studies think-tank in South-east Asia. Today, Prof Wong, 71, is its professorial fellow.

The Hong Kong-born academic moved to Singapore in 1970 with his wife, sociologist Aline Wong, who became a People's Action Party MP from 1984 to 2001 and a senior minister of state.

His early research was in China's rural and agricultural development. He then diversified into the study of China's trade relations with Asean. Later, he paid more attention to domestic problems related to Deng's economic reforms.

However, even in the early 1990s, China remained a politically sensitive subject here and in the region because of the legacy of the Cold War. This made it difficult for scholars to get information. Publications on China, for example, were restricted.

Another challenge for Prof Wong then was the shortage of social scientists who had done PhDs on China. Hence, a number of researchers hired in the institute's early days were exiles from China with complicated political backgrounds.

Can Singapore remain relevant to an increasingly powerful China?

In Prof Wong's view, a lot of the goodwill Singapore has generated among China's leaders stems from 'the political capital of PM and now MM Lee Kuan Yew - they respect him. If he is not around and, given that China will become even more important as a power, I think the relationship will probably be less important to them'.

However, in the context of South-east Asia, Singapore is still significant, he says, as a stepping stone for Chinese companies to expand regionally and a favoured destination for their regional headquarters.

'I'm optimistic because China is growing more influential and we, as a small country, are still in their good books. So far, we have no direct conflicts with China, no territorial disputes, we are not a threat to China,' he says.

Key bilateral events

  • 1975: Foreign Minister S. Rajaratnam leads first state delegation to China.

  • 1976: Prime Minister Lee Kuan Yew's first visit to China.

  • 1978: China's paramount leader Deng Xiaoping visits Singapore.

  • 1981: China and Singapore exchange trade representatives for first time.

  • 1985: Direct Singapore and China airlinks established with first SIA flights to Shanghai and Beijing. Chinese airlines start flying here.

  • 1990: China and Singapore establish diplomatic relations on Oct 3.

  • 1992: Deng Xiaoping tours southern China, where he praises Singapore's development, prompting hundreds of
    Chinese delegations to go there on study trips. Singapore's Institute of East Asian Political Economy set up to study China. In 1997, it becomes the East Asian Institute.

  • 1993: Business council to strengthen cooperation between Singapore and Shandong province established.
    Singapore now has seven government-to-government economic councils with the provinces.

  • 1994: Bilateral pact to develop Suzhou Industrial Park signed.

  • 1998: NTU launches 'mayors' class' for Chinese officials with a Master of Science in Managerial Economics. In
    2005, it starts a Master of Public Administration degree. Over 900 Chinese officials have taken the courses.

  • 2004: Prime Minister Lee Hsien Loong's informal visit to Taiwan - given prominent media play in Taipei - sparks a backlash from China that leads to a brief cooling of relations.

  • 2007: Singapore and China sign pact to develop an eco-city in Tianjin.

  • 2008: China-Singapore Free Trade Agreement signed, enforced in 2009. Centre for Singapore Studies set up
    by the University of Shenzhen, the first in China to research Singapore.

  • 2010: Singapore and southern Guangdong province agree to develop a Knowledge City in Guangzhou.

  • Breaking the ice slowly with China

    IT OUGHT to have been a happy reunion when Mr Lee Khoon Choy met his brother in Beijing during the first Singapore government visit to China.

    In 1975, Mr Lee was Senior Minister of State for Foreign Affairs, accompanying Foreign Minister S. Rajaratnam on an ice-breaking visit to a country in the last gasp of the Cultural Revolution.

    His younger brother had defected to the communist country more than 20 years ago. The former Chung Cheng High School student had joined many young and idealistic Chinese in South-east Asia, who returned to help rebuild the motherland.

    But when they met in Mr Lee's room in the premier Beijing Hotel and the older man asked how he was, his brother could only look at the ceiling and say: 'All is well under the leadership of Chairman Mao.'

    Mr Lee, now 86, later found out that his brother had suffered in the last 10 years, and had been sent to do hard labour in the remote wilds of western China. His fate was similar to that of many huaqiao (overseas Chinese) who were distrusted in Chinese society, and could not return to Singapore or Malaysia as they were deemed security threats. With Mr Lee's intervention, his brother later fled China for Hong Kong.

    Mr Lee Kuan Yew made his first trip to China as Prime Minister in 1976. Later on, in his memoirs, he would say that such huaqiao should have been allowed to return home as their disillusionment 'would have been our best inoculation against the virus of Maoism'.

    One key organiser of these early trips to China was Mr Lee Khoon Choy, the most senior Chinese-educated Foreign Ministry official. He had studied in Chung Ling High School in Penang.

    In the 1970s, China emerged from international isolation and established diplomatic relations with many countries.

    After Malaysia and China normalised ties in May 1974, Mr Lee Kuan Yew decided to initiate formal contacts with the Chinese government. But he wanted to make clear that Singapore would exchange diplomats with Beijing only after Indonesia had resumed official relations with China.

    Mr Rajaratnam and Mr Lee Khoon Choy, who had just completed a stint as ambassador to Indonesia from 1970 to 1974, went to China in March 1975 to convey the message. They met Chinese Foreign Minister Qiao Guanhua and an ailing Premier Zhou Enlai.

    Premier Zhou told them China respected Singapore as an independent state. Recalled Mr Lee: 'I remember he said: 'Even if you are a Chinese, once you become a Singapore citizen, you must abide by the law of your country, you are no more under our supervision'.'

    [It is telling that this has to be stated. If not stated, does that mean we can assume that they would "supervise" Chinese Singaporeans?]

    He and Mr Rajaratnam also accompanied Mr Lee Kuan Yew to China in 1976 and 1980. During the visits, Mr Lee Kuan Yew reinforced the point that China must cut off its relationships with the communist parties of South-east Asia if it wanted to have cordial relations with those governments. Eventually, in 1981, the Communist Party of Malaya stopped its radio broadcasts from China.

    Singapore and China sealed full diplomatic relations in October 1990, after Indonesia restored ties with China in August the same year, and after China accepted Singapore's longstanding practice of training its troops in Taiwan, which Beijing regards as a breakaway province.

    Mr Lee Khoon Choy retired from politics in 1984 as Senior Minister of State (Prime Minister's Office) and MP for Braddell Heights, but still continues to visit China extensively as a business consultant and painter. He has also written two books on the country.

    Ask him how he thinks Singapore can hold its own in dealing with China, and he says the problem lies in the over-emphasis on English in Singapore's education system.

    He believes the Chinese-medium schools and the Chinese-language Nanyang University, or Nantah, should have been allowed to continue.

    'You concentrate too much on English, now you want to catch up, it's very hard. The young are already anglicised.' This makes it hard for them to communicate with the Chinese, as 'meiyou xinxin-xiangyin (you're not a kindred spirit)'.

    'If today we still had Nantah, and you needed bilingual people for China relations, you could find such people any time,' he said.

    [Perhaps. But the reasons for closing Nantah are also valid and important for Singapore. We can't have our cake and eat it. The problem with the Nantah grads was that they were unable to be employed (if I remember the reasons correctly) and there was the risk of communist insurgency. If we had stayed with the Nantah system, we might not have been so interesting to the Chinese now.]

    Cultivating guanxi at the top

    A HIGH-PROFILE tour of southern China by Mr Deng Xiaoping in February 1992 proved to be a turning point not just for China but also for Mr Cheng Tong Fatt, who was Singapore's first ambassador to China.

    The late Chinese leader's trip took place amid the political tension following the 1989 Tiananmen crackdown on pro-democracy activists.

    When he urged southern Guangdong province to catch up with Asia's four economic dragons (Hong Kong, Singapore, South Korea and Taiwan) in 20 years, he signalled that China would not back down from reforming and opening up its economy.

    Mr Cheng, a top civil servant who took up his posting in Beijing in July 1991, found that after Mr Deng's tour, diplomats like him gained better access to the Chinese bureaucracy and citizenry.

    Previously, officials he met were quite reticent. 'I found that sometimes, guests would refuse lifts home because they were afraid of being accused of pandering to foreign interests. That was the sort of atmosphere at that time,' he recalls.

    'After Deng's tour, there was a big sigh of relief and excitement among all the officials. It put to rest all these arguments between capitalism (xingzhi) and socialism (xingshe); you know, whether a cat is black or white, it doesn't matter as long as it can catch rats,' he says, citing Mr Deng's famous cat analogy.

    The Chinese leader, who visited Singapore in 1978, said on his southern tour: '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.'

    As ambassador, Mr Cheng had to uphold Singapore's interests in China, report on conditions there and facilitate official and civilian exchanges. This involved building up good relationships (guanxi) from scratch, in a vast country where power is not based on a legal system but concentrated among individual leaders and officials.

    A good word on Singapore from China's highest leader sped things up. Soon after Mr Deng's remarks, Mr Cheng was asked to help arrange a study trip for the Chinese Communist Party's (CCP) Propaganda Department, a major department controlling the mass media and ideology.

    In July 1992, the Propaganda Department's executive vice-minister Xu Weicheng led an 11-member delegation to Singapore. Upon their return, they submitted a report that was circulated through the highest echelons of power.

    As a result, Singapore was flooded with visits from Beijing and provincial officials, 'so much so that Singapore civil servants found it difficult to meet all the requests', says Mr Cheng.

    This led then prime minister Lee Kuan Yew to suggest that Singapore transfer its experiences by jointly developing an industrial estate with China, which became the Suzhou Industrial Park.

    Before becoming a diplomat, the Chinese-educated Mr Cheng was permanent secretary of the Ministry of Culture and deputy chairman of the then Singapore Broadcasting Corporation. He left these positions in 1988 to become ambassador to Japan for three years, followed by a seven-year posting as ambassador to China.

    The uplift in bilateral ties continued well after he left Beijing, and he attributes this to a few factors.

    One, the trust and respect the Chinese have for then PM, and now Minister Mentor, Lee. Mr Cheng recounts how, soon after the Tiananmen crackdown, China was isolated by the West.

    'MM was continuously making speeches calling for the Western powers to re-engage China, making statements which the Chinese could not make themselves. The Chinese leadership was greatly appreciative of what MM had done.'

    Another factor is Singapore's efforts in training Chinese students and officials. Initially, China was reluctant to send its students even with scholarships from Singapore, says Mr Cheng.

    It was stung by how, soon after the Tiananmen event, the United States Congress passed a law to allow all the Chinese students in the US to stay on, and they lost as many as 40,000 students.

    In 1992, the Singapore ambassador met Li Tieying, the state councillor in charge of education. 'I told him, each year, you have three million gao kao students (senior middle school students sitting the university entrance exam) in the whole country, and your universities can take in only 600,000 undergraduates,' Mr Cheng recalls. 'He thought it over and said, 'Okay, you can have 300.' So that was how it started.'

    The Chinese students who stayed on in Singapore after completing their education added to the talent pool here, while those who returned home became a bridge between the two countries.

    He believes, however, that the biggest single impetus to bilateral relations has been the frequent exchange of high-level visits which 'provided opportunities for frank and friendly consultations and helped to defuse conflicts and problems'.

    Since 1990, he notes that MM Lee has visited China every year, sometimes twice a year, while Senior Minister Goh Chok Tong and Prime Minister Lee Hsien Loong have also visited China regularly. Chinese central government and provincial leaders have frequently visited Singapore - including Premier Li Peng in 1990, President Jiang Zemin in 1994, Premier Zhu Rongji in 2000 and current President Hu Jintao in 2009.

    An example of how high-level exchanges helped nip a bilateral problem in the bud was in the mid-1990s, when SingTel wanted to launch a satellite in a joint venture with Taiwan Telecommunications. The Chinese objected because they intended to launch a satellite close to the SingTel satellite position.

    Mr Cheng recalls how MM at one visit broached the issue over dinner with President Jiang. Normally, such a matter would not be dealt with by Mr Jiang, also the CCP's General Secretary, but by the ministry and agency concerned. However, in this case, the agency involved was the powerful Poly Group, which counts defence technology among its businesses.

    After MM's visit, there was no news on the satellite deadlock. Then one day, SingTel told Mr Cheng the Chinese had inexplicably given up the fight.

    Much later, Mr Cheng was playing golf with Mr Wang Jun, chairman of state-owned investment company Citic and the Poly Group. 'I asked him why he gave up the satellite project. He said, 'Oh, if the General Secretary wants me to give up, I have to give up.''

    That incident, Mr Cheng notes, proved beyond a shadow of a doubt the importance of cultivating relationships at the top.

    Ditch the BlackBerry, meet face to face

    IT WAS all farmland and salt marshes as far as the eye could see when a 38-year-old Goh Toh Sim arrived in eastern Suzhou with his young family for the gamble of his career.

    That was in August 1994, six months after China and Singapore signed on the dotted line to build an ultra-modern industrial park from scratch, in an ancient city once known as China's Venice.

    He had never set foot in that vast country. Nonetheless, he quit his administrative service job, relocated his family to Suzhou, and became a senior executive managing the unprecedented bilateral project.

    The Suzhou Industrial Park (SIP), a joint venture between the two countries, was initially plagued by differences between Singapore and the local Suzhou authorities before becoming a success story.

    Mr Goh, now 54, was there through the nail-biting first seven years of the China-Singapore Suzhou Industrial Park Development Company (CSSD). When the park posted its first profit in 2001, he was the CSSD's executive vice-president and its top Singapore executive.

    By the time he left two years later, not only had the park generated enough to reverse its cumulative losses, but he had also won the trust of Suzhou officials.

    Bitten by the China bug, he went on to helm the China businesses of various Singapore infrastructure and property companies, and is now Keppel Corporation's chief representative for China.

    As for the SIP, gross domestic product grew by an average of 20 per cent every year from 2003 to 2008. GDP growth was 15.1 per cent last year and has reached 112 billion yuan (S$22 billion).

    Singapore gave up its majority stake in the SIP to its Chinese partners at the start of 2001, retaining a 35 per cent share in the industrial township.

    Minister Mentor Lee Kuan Yew, in his memoirs, called the SIP a 'chastening experience', through which Singapore came to grips with 'the intricacies of the multi-layered (Chinese) administration and flexible business culture'.

    As prime minister in 1993, he had conceived of the project for Singapore to share with China its experience of attracting investments and master-planning industrial parks with homes and offices.

    The problem in the early years was that while the central government in Beijing endorsed these objectives, the Suzhou authorities were interested in immediate gains and became more invested in a rival industrial estate. They threw their weight behind the SIP only after becoming the majority partner.

    Mr Goh's lesson from his experiences has been 'a better grasp of the nuances in government and corporate cultures, when to push the envelope and to take a step back'. Business deals, he notes, are only possible when both sides have something to gain.

    Left in Suzhou as Singapore's point man after the ownership change, he worked hard to connect with his Chinese bosses and colleagues.

    The effort paid off. In 2001, he was the only non-Chinese national invited to a major meeting organised by Suzhou officials on the SIP. The gesture was akin to 'the PAP inviting a foreigner to their party meeting', Mr Goh explains.

    He says that with the SIP, Singapore has introduced 'many concepts that were at the time new to China, like master-planning, one-stop approval process and a pro-business mindset'.

    The SIP's success has opened doors for other Singapore businessmen in China. To them, the Suzhou veteran advises ditching the BlackBerry as 'face-to-face meetings are necessary to understand the issues and to glean clarity out of the web of their complex system'.

    The SIP is now a green, well-manicured mini-Singapore, connected by high-speed rail to Shanghai. Not far off, Suzhou's old city, with its picturesque gardens and canals, has been spruced up.

    As China, the world's largest carbon emitter, seeks to become more environmentally friendly, opportunities abound in sustainable urban development and waste and water resource management.

    Mr Goh is in the thick of this, helping to coordinate the Tianjin Eco-City project, a 50-50 joint venture between a Chinese consortium and a Keppel-led Singapore consortium.

    Such bilateral projects are never just technocratic exchanges, but must generate goodwill. For that, cultural sensitivities are key and Singaporeans need to grasp the speed at which the economic giant is changing, he stresses.

    'While we were exposed to the world in the 1990s, many Chinese could not even get a passport,' he says. Now the Chinese have scored huge deals not just in North America and Europe, but as far afield as Africa and South America.

    In short, 'we are seeing a China that is more confident about its future, more assertive and more nationalistic'.

    A never-ending courtship

    THE businessman in Mr Poh Choon Ann was quick to sniff out opportunities when China's doors creaked open, but he also had a deep-seated curiosity that went beyond dollars and cents.

    As a Chung Cheng High School student in the 1950s, the chairman and chief executive of mainboard-listed Poh Tiong Choon Logistics grew up with textbooks from China and studied Chinese history.

    'You could say that Chinese school students at the time had a curiosity, respect and yearning for China. It used to be a very closed country, so when it began to open up, I really wanted to go there and take a look,' he says in Mandarin.

    In 1981, Mr Poh visited China for the first time via Hong Kong. The next year, he made his first trip to Beijing. By 1983, he had set up a Hong Kong-based trading company that sold textile fibres to China.

    As the Chinese economy grew in the 1990s, he switched from trade to logistics, first in a joint venture with a Chinese firm, and then going solo.

    Along the way, he learnt to respond to the vagaries of the Chinese market. For example, he found that the company was caught between multinational logistics giants on the one hand, and cheap Chinese logistics firms on the other.

    To trim costs, he closed down branch offices he had set up around China, opting to work through agents in these cities while consolidating operations in the financial hub Shanghai.

    Today, Poh Tiong Choon Logistics (Shanghai) services clients in the chemicals sector across 20 Chinese cities, providing shipping, land and air transportation, warehousing and supply chain management.

    Mr Poh's 30 years of experience in China make him a business veteran in one of the world's most lucrative and yet opaque economies. He has also witnessed how Chinese society has evolved from the poverty and isolation of the 1980s.

    The father of five, now 73, recalls that when he first visited Beijing in 1982, public toilets had no doors because of a shortage of wood, and in the hotel where he stayed, all the doors to the rooms had no locks.

    Four years later, when Mr Poh stayed at another hotel in Beijing, he found it had room service, but could not fathom why, when porridge was delivered to his room, it always came without chopsticks.

    When he called room service to ask for a pair, he got a shock when told that the service staff on his floor had to sign a guarantee for the chopsticks. Which, of course, they refused to do.

    Later, he found out why from local friends: Tourists in those days thought nothing of taking home those wooden chopsticks as souvenirs, but a dozen missing pairs would cost Chinese staff 10 to 20 per cent of their monthly wages.

    Mr Poh chuckles when recalling these episodes, but says they reflect the times.

    'The Chinese were not used to foreigners. We felt uncomfortable but had to adapt, just as they were adapting to us.'

    But once his contacts warmed to him, he found them friendlier than the Chinese today. 'They did not think so much about what they could get out of foreigners. Now with the country's rise, the mindset has changed.'

    Ever ready to share his experience with small and medium-sized enterprises (SMEs) wanting to break into China, he leads an average of four business delegations there every year.

    Mr Poh's advice to SMEs: Avoid 'remote control management', flying to China for meetings only when problems crop up. 'You talk, you wine and dine the Chinese, you think the problem has been resolved. After you return to Singapore, three days later, the problem comes back.'

    Given that SMEs have limited capital, the best way of investing in China is to pool resources and form a small consortium, he says.

    In one phrase, he sums up the experience of doing business in China - tan bu wan de ai (a never-ending courtship). This is because things work not according to the rule of law, but through relationships or guanxi.

    The last thing businessmen should do there is keep using their home country as the benchmark, he stresses. He recalls a Singapore friend who once snapped at a meeting with his Chinese counterparts: 'It's very simple in Singapore, why are you making it so difficult?'

    'I told him, 'That's it, you're finished. You can't negotiate like this.' The Chinese will say, 'You think Singapore is so great?''

    No comments: