What China learned from Lee Kuan Yew… and India didn’t

One of the asymmetries of history is the lack of correspondence between the abilities of some leaders and power of their countries,” Henry Kissinger famously wrote of Lee Kuan Yew. Kissinger’s contention was that a technocrat like Lee deserved to lead a bigger country than Singapore, the city of 5 million he ruled for three decades. Yet, given the huge influence Lee had on the late Deng Xiaoping’s policies after Deng decided to move away from Communism in the late 1970s, it’s possible to argue that Lee’s economic principles helped create the Chinese juggernaut.

Deng’s decision to open up special investment zones for foreign investors, starting with Shenzhen at the tip of southern China in late 1979, was prompted by a visit toSingapore in 1978. Deng quickly dispatched several hundred Chinese officials to study Singapore, a special economic zone all its own, soon after. Today, Shenzhen boasts one of the busiest ports in the world, total foreign direct investment of $30 billion, skyscrapers and tropical gardens, and looks like a Singapore knock-off. Several elements of the Singapore development formula laid the foundation of what Beijing calls “capitalism with Chinese characteristics”.

The anomalous hybrid of state capitalism led by what Beijing believes is a benign dictatorship in China should more truthfully be called “capitalism with Singaporean characteristics”. Singapore remains the busiest port in the world, but half the world’s largest ports are now in China. Hewlett-Packard (HP) and its computer assembly factories were among the earliest foreign investors in Singapore along with Texas Instruments. Today, HP is a big investor in Chongqing, a 30 million city-state of a sort in China, where one in every four laptops in the world is made.

The Chinese bureacracy’s ‘build it, investors will come’ approach to infrastructure was perfected first by Singapore’s trade promotion arm, the Economic Development Board (EDB) in the 1980s and 90s. No other country in Asia pursued economic diplomacy quite like the EDB did. By the mid-1990s, half of Singapore’s output was electronic products. China’s obsession with exports and electronics assembly can also be attributed to having learned from the Singaporean textbook. Consider the outsized imprint China and Asia has on global trade: in 1990s, Asia accounted for a little over a quarter of global manufacturing output. By 2013, that figure was about 46 per cent — with China responsible for half of that.

In repeated visits dating back to the death of Zhou Enlai in January 1976, Lee reached out to China in a way that the leaders of Japan, colonial Hong Kong and Taiwan were neither inclined to nor able to for complicated historical reasons. Nor did these countries display the Singaporean-style single-mindedness that China does in courting foreign investors today. Recently, Vivek Chaand Sehgal, chairman of Samvardhana Motherson Group, the massive Indian auto parts multinational with operations in China and Europe, recounted how surprised he was to receive a visit in New Delhi some years ago from the mayor of a city near Shanghai who was not only prepared to provide land, but even ensure that it had the right vaastu.

Like Lee, who was famously a critic of Western values of unbridled democracy and relaxed social policies, Deng was agnostic about using capitalist ideas to help transform China. Emblematic of this attitude of pragmatism were remarks Lee made in an interview with Fareed Zakaria in Foreign Affairs in 1994: “If we did not have the good points of the West to guide us, we wouldn’t have got out of our backwardness. We would have been a backward economy with a backward society.”

Much of Lee’s notions of ‘Asian values’ and democracy not being right for Asia were nonsense and proven wrong when the baton of free elections and a free press was passed across Asia, from Korea to Taiwan to Indonesia. His idea pushing graduates to marry graduates was even worse. President Xi Jinping’s current plans to ‘reform’ the Chinese judiciary while rounding up most human rights lawyers are not dissimilar to Lee’s tendency to use the courts in Singapore to impose ruinous damages for libel on opposition politicians and Western publications, while ensuring the courts were efficient in enforcing contracts. Even when governing Hong Kong, Beijing is guided not by Hong Kong’s own liberal values and its history of independent courts and a free press, but by Lee’s problematic political legacy in Singapore, a much tamer city.

In occasional dispatches from Singapore, I could not help ridiculing editorials in The Straits Timesthat called on people to be punctual in the horrified tones of someone criticising thievery. Its malls, seemingly erected above every other metro station, drove me insane. But look how shopping dominates the landscape of Dubai, Hong Kong and parts of Mumbai and Delhi today and it is hard not to conclude that we are all Singaporeans now. Photos in the local newspaper shaming people who did not flush in public toilets seemed absurd, but perhaps less so when you are an inhabitant of a country with a shortage of public toilets and where clean public loos are only to be found in Singaporean-styled shopping malls. Having listened to Lee address American Fortune 500 CEOs in Singapore two decades ago, I can attest that few leaders sermonised quite as annoyingly as he did, but he was often right.

When India started opening its economy in the early 1990s, Singapore rushed in with offers of help. The Singaporeans were rebuffed time and again by India’s sclerotic bureaucracy. By contrast, China’s good fortune was that it had leaders who adapted the successful blueprint that city-states such as Hong Kong and Singapore offered because they realised China urgently needed employment for hundreds of millions in just the labour-intensive industries those two cities had built their fortunes on decades earlier. Perhaps Deng’s pragmatism in importing ideas from the tiny city-state Lee built would never have worked in a country as uniquely complicated as India. The tragedy is none of our leaders really tried.