Prime Minister Lee Hsien Loong "does not accept" that the countries of ASEAN have turned away from America, even as their relationship with China has deepened over the past few decades.

Speaking to Bloomberg editor-in-chief John Micklethwait, PM Lee said that China is a "fact of life" for countries in Southeast Asia, as their biggest trading partner, a major diplomatic partner, a significant investor, and an important source of tourism.

However, America still remains a vital partner in the region.

PM Lee, who is in Davos, Switzerland for the World Economic Forum, said: "Maybe some countries have calibrated that position but Singapore certainly values our relationship with America as much as ever."

America still has the confidence to play a role overseas

PM Lee acknowledged that a conversation is taking place in America about its responsibilities around the world, whether they should continue to be as open as they have, and added that he understands what drives that manner of thinking.

But he said that in the long-term, the Americans will have the confidence to continue to play a role overseas, "which should be more than one of putting narrow self-interest first".

PM Lee mentioned that the meeting between the ASEAN member countries and U.S. President Donald Trump was still on schedule for March 2020.

Added PM Lee:

"I hope that Mr Trump, amidst his many domestic preoccupations, will send a message that Asia is important to him and Southeast Asia has its part in the American scheme of things."

What is America's goal?

In the short term, PM Lee said he was "relieved" that Singapore avoided a recession in 2019, with a small growth rate of 0.7 per cent.

He added that while there was a chance to do better in 2020, a lot depended on the actions of the U.S., and how it impacted the global economy.

Micklethwait asked for PM Lee's thoughts on the outcome of the trade talks, which saw a recent conclusion of a "Phase One" deal.

PM Lee replied that while he was relieved the situation had stabilised for now, for the tougher talks ahead, the Americans had to "make up (their) minds”:

"Are you doing this because you want to keep a level playing field and make sure the Chinese play according to rules of the game and may the best man win?

Or are you doing this because you want to keep on winning, and whatever rules of the game are necessary you will create those rules to make that outcome?"

China will have to decide if they are going to be "constructive players"

Micklethwait pointed out that the Trump administration's motto was "America First”.

But PM Lee said that Americans had to decide if it was better for the U.S. to be a "big country when in a troubled world", or "prospering in a world where there are other countries doing well”.

The Chinese, on the other hand, also have to decide what kind of partners they intend to be.

Explained PM Lee:

"On the Chinese side, they have to make up their minds that they are going to be constructive players in the global economy and the global community of nations.

Therefore, rules which were acceptable to other countries when they were smaller and less dominant now have to be revised and renegotiated... How you conduct yourself in a way that after decades as a major power, people still welcome you and do not consider you an oppressive presence."

PM Lee: Every system has security weaknesses, not just Huawei

Micklethwait asked PM Lee about the security concerns America had highlighted over Huawei and the 5G network.

He referred to PM Lee's statement to the telecom companies to make up their own mind whether or not to use Huawei, and asked if it implied that Singapore did not agree with the American position that Huawei is a security threat.

PM Lee said he was of the view that any system has weaknesses that could be exploited, if not now, then certainly by others in the future.

He added that this held true no matter what system was used, and said:

"There will be gaps, weaknesses, and vulnerabilities, and you have to live with them. Whoever’s system you have, you must be able to police it and try your best to keep it secure and appropriate to the purpose to which you put it."

Micklethwait mentioned that NATO signatory countries such as Germany and France also did not share the American view that Huawei was an immediate threat.

But PM Lee said this didn't mean that the Europeans or Singapore are ignoring the threat.

He said that they take the U.S.'s views seriously, but they had to make their own assessments, and may come to a different conclusion from the Americans.

South China Sea: China's interest to have freedom of navigation

Micklethwait asked about the negotiations between China and ASEAN for a code of conduct (COC) on the South China Sea, which PM Lee confirmed were ongoing.

He asked if the expectations of ASEAN and the West were "unrealistic", given China's military and economic might.

But PM Lee pointed out that it was in China's interests to have unimpeded freedom of navigation:

"... as they become big and as they become more integrated in the world, their interest will become like the other superpowers, which depend on unimpeded freedom of navigation through many troubled parts of the oceans.

I think that it is not such a straightforward calculation to say it is obviously one-sided and therefore conclusions foreordained."

He explained that the COC was about the protocol for advancing claims and resolving disputes, which is not easy as every party has a different definition of their own rightful claims.

But he remarked that despite the difficulty, negotiating was still better than abandoning the process and "coming to blows" on the ground.

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Singapore's role as China grows

Micklethwait asked about Singapore's future as a free trading hub, as more business leaders are looking at dividing their supply chain with two priorities:

• Getting things out of China that might go to America.
• Having Asian manufacturing supplies aimed at Asians.

PM Lee replied that some companies might want to have a "China plus one" strategy, to have a presence in China but also somewhere relatively nearby, such as South Asia or East Africa.

He felt that "direct displacement" from China to Singapore would not be significant, as the kind of industries operating in China would not find it easy to move to Singapore, due to the different conditions.

However, he envisioned another role for Singapore as the Belt and Road initiative gears up, along with more infrastructure projects:

"We have a role in financing it, hosting regional headquarters for it, and working with them, providing expertise, making sure that the projects go well.

We have infrastructure capabilities working with the World Bank. We can cooperate with the Asian Infrastructure Investment Bank (AIIB)."

Top image from MCI.