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Viewing cable 09SINGAPORE529, DEPUTY SECRETARY STEINBERG’S MAY 30, 2009

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Currently released so far... 09SINGAPORE529 2009-06-04 09:09 2010-11-29 21:09 SECRET Embassy Singapore
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Articles R 040908Z JUN 09

FM AMEMBASSY SINGAPORE
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S E C R E T SINGAPORE 000529
Browse latest releases EO 12958 DECL: 06/04/2029
TAGS OVIP (STEINBERG, JAMES B.), PREL, MNUC, ECON, SN, CH,
2010/12/02 KN
2010/12/01 SUBJECT: DEPUTY SECRETARY STEINBERG’S MAY 30, 2009
2010/11/30 CONVERSATION WITH SINGAPORE MINISTER MENTOR LEE KUAN YEW
2010/11/29 Classified By: Charge d’Affaires Daniel L. Shields. Reason 1.4 (b) and
2010/11/28 (d).
¶1. (SBU) May 30, 2009; 6:30 p.m.; The Presidential Palace; Singapore.
¶2. (SBU) Participants:
Browse by creation date United States
-------------
66 72 75 79 86 89 90 03 The Deputy Secretary Glyn T. Davies, EAP Acting Assistant Secretary
04 05 06 07 08 09 10 Daniel L. Shields, CDA (Notetaker)
SINGAPORE
Browse by origin ---------
Minister Mentor (MM) Lee Kuan Yew Chee Hong Tat, Principal Private
A B C D H I J K Secretary to MM Cheryl Lee, Country Officer, Americas Directorate, MFA
L M N O P R S T ¶3. (S) SUMMARY: Deputy Secretary Steinberg used his meeting with
U V Minister Mentor Lee Kuan Yew to stress the importance of Chinese
cooperation in addressing the North Korea nuclear issue and to elicit MM
Lee’s views on China and North Korea. MM Lee said the Chinese do not
Browse by tag want North Korea to have nuclear weapons and do not want North Korea to
A B C D E F G H collapse. If China has to choose, Beijing sees a North Korea with
nuclear weapons as less bad than a North Korea that has collapsed. MM
I J K L M N O P Lee asked Deputy Chief of the People’s Liberation Army (PLA) General
Q R S T U V W X Staff Ma Xiaotian what China can do about North Korea. General Ma’s
Y Z answer was that “they can survive on their own.” The Deputy Secretary
noted that the DPRK could have a fair and attractive deal if it would
Browse by classification change its approach. If not, North Korea faces a change of course by the
United States, the ROK and Japan. MM Lee said he believes Japan may well
CONFIDENTIAL “go nuclear.” MM Lee also offered views on the Chinese economy, Taiwan,
CONFIDENTIAL//NOFORN Chinese leaders, and U.S.-China relations. End Summary.
China and North Korea
SECRET ---------------------
SECRET//NOFORN ¶4. (S) Deputy Secretary Steinberg met with Singapore Minister Mentor
UNCLASSIFIED Lee Kuan Yew on May 30 on the margins of the Shangri-La Dialogue, the
UNCLASSIFIED//FOR annual international security forum held in Singapore. The Deputy
OFFICIAL USE ONLY Secretary used the meeting with MM Lee to stress the importance of
Chinese cooperation in addressing the North Korea nuclear issue and to
elicit MM Lee’s views on China and North Korea. MM Lee said the Chinese
Community resources do not want North Korea to have nuclear weapons. At the same time, the
Chinese do not want North Korea, which China sees as a buffer state, to
Follow us on Twitter collapse. The ROK would take over in the North and China would face a
Check our Reddit U.S. presence at its border. If China has to choose, Beijing sees a
Twitter this North Korea with nuclear weapons as less bad for China than a North
Digg this page Korea that has collapsed, he stated.
¶5. (S) MM Lee said he asked Deputy Chief of the People’s Liberation
courage is contagious Army (PLA) General Staff Ma Xiaotian what China can do about North
Korea. General Ma’s Delphic answer was that “they can survive on their
own.” MM Lee said he interpreted this as meaning that even if China cut
off aid, the DPRK leadership would survive. This is a leadership that
has already taken actions like killing ROK Cabinet Members in Burma and
shooting down a KAL flight. If they lose power, they will end up facing
justice at The Hague, like Milosevic. They have been so isolated for so
long that they have no friends, not even Russia. They have not trusted
China since the Chinese began cultivating ties with the ROK, given
China’s interest in attracting foreign investment, he said. The Deputy
Secretary noted that the DPRK could have a fair and attractive deal if
it would change its approach. If not, North Korea faces a change of
course by the United States, the ROK and Japan. MM Lee expressed worry
about the effect on Iran if the DPRK persists. MM Lee said he believes

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Cable Viewer 02.12.10 13:53

about the effect on Iran if the DPRK persists. MM Lee said he believes
the DPRK can be contained and will not proliferate, but Iran has very
high ambitions, ties to Shiite communities outside Iran, and oil wealth.
¶6. (S) The Deputy Secretary noted that North Korea’s decisions will
have an impact in Japan. MM Lee said he believes Japan may well “go
nuclear.” The Chinese must have factored this into their calculations
and concluded that the prospect of Japan with nuclear weapons is less
bad than losing North Korea as a buffer state. The Chinese take a long-
term view and must think that within a few years the DPRK’s current
leadership will be gone and there will be new leadership, with new
thinking. But there will still be a North Korea, he said.
¶7. (S) MM Lee said he wishes the USG well in its efforts on North
Korea, but he would be surprised if the North Koreans agree to give up
nuclear weapons. They might give up a first-strike capacity, but they
want nuclear weapons in case the USG decides to seek regime change. They
are psychopathic types, with a “flabby old chap” for a leader who
prances around stadiums seeking adulation. MM Lee noted that he had
learned from living through three and a half years of Japanese
occupation in Singapore that people will obey authorities who can deny
them food, clothing and medicine.
¶8. (S) MM Lee said the ROK, after seeing what had happened with German
unification, does not want immediate unification with the DPRK. There is
“nothing there” in the DPRK, other than a military organization. Kim
Jong-Il has already had a stroke. It is just a matter of time before he
has another stroke. The next leader may not have the gumption or the
bile of his father or grandfather. He may not be prepared to see people
die like flies. China is calculating all this. They have their best men
on the job. They want to help the United States to advance common
objectives. But they do not want the South to take over the North, MM
Lee said.
Chinese Economy
---------------
¶9. (C) Regarding the Chinese economy, MM Lee said the global economic
crisis has hit many countries, but the feel on the ground differs
considerably from place to place. The Chinese economy is reportedly in
the doldrums, but when MM Lee visited Jiangsu Province on May 24, his
impression was one of continued prosperity. Shanghai has been harder
hit, with container port traffic down 30-35 percent, similar to the
situation in Singapore. There is no sign of deep unrest in China. The
Chinese are very confident they will be able to sustain eight percent
growth. The government is pumping resources into the economy, with a
focus on developing Western China. Whether such policies can be
sustained for three to four years is unclear, but China can certainly
sustain these policies for at least a year, he said.
¶10. (C) MM Lee stated that in the absence of a social safety net in
China, the Chinese savings rate is 55 percent, exceeding even
Singapore’s 50 percent level. Consumption accounts for only 35 percent
of Chinese GDP, as opposed to 70 percent of U.S. GDP. The Chinese
leadership may be loath to shift permanently to a more consumption-
oriented economy, but the leadership will do so temporarily, if only to
avoid unrest. 20 million people have moved back to the countryside
because of economic dislocations. The government is providing
microfinance to facilitate the transition. The pragmatists are in
charge. There is nothing Communist about it. They just want to preserve
one party rule. The Deputy Secretary expressed concern that current
Chinese policies designed to counter the economic crisis could undermine
reform. MM Lee said this cannot be helped. China wants to prevent riots
like the ones that happened in Guangzhou in March when Hong Kong-
connected enterprises suddenly shut down, he said.
Taiwan
------
¶11. (C) The Deputy Secretary asked MM Lee for his assessment of Taiwan.
MM Lee said former President Chen Shui-bian had left Taiwan in a weak
economic position, which had enabled President Ma Ying-Jeou to come to
power with his pledge to strengthen the economy through means including
expanding the three links with China. In Beijing, former President Jiang
Zemin was wedded to his eight-point approach, but President Hu Jintao
was more flexible. Jiang wanted to show he was a great man by solving
the Taiwan issue in his lifetime, but Hu is more patient and does not
have any fixed timeline. In Chinese domestic politics, Hu had wanted
Vice Premier Li Keqiang from the Communist Youth League to emerge as his
successor, not Vice President Xi Jinping, but Hu did his calculations
and accepted Xi when it became clear that Xi had the necessary backing
from the rest of the leadership. Similarly, on Taiwan, Hu will be
pragmatic. It does not matter to Hu if it takes 10 years or 20 or 30.
The key is building links with Taiwan. As in the case of Hong Kong, if
necessary the tap could be turned off, he said.
¶12. (C) In this context, MM Lee said, Hu could live with Ma’s positions
on the ‘92 consensus and on not addressing the reunification issue
during his term in office. What mattered to Hu was that Taiwan not seek
independence. If that happened, China has 1,000 missiles and is building
its capacity to hold the U.S. fleet at a distance. The implicit question
for Taiwan’s leaders is if that is what they want, MM Lee said.
¶13. (C) MM Lee stated that the alternative is Mainland investment in
Taiwan stocks and property. The Mainland has already assured Hong Kong
that it will help out economically. The Mainland has not said this to
Taiwan, but the Mainland’s Taiwan Affairs Director, Wang Yi, did urge
Chinese companies to invest in Taiwan. In four years Taiwan’s economy

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Chinese companies to invest in Taiwan. In four years Taiwan’s economy

will pick up and Ma will win re-election. The DPP lacks strong potential
candidates. Su Zhen-chang is promising, but seems unlikely to be able to
win. Meanwhile, even the traditionally DPP-supporting farmers in
Taiwan’s South need China’s market for vegetables and other products.
Taiwan’s continued participation in the World Health Assembly depends on
Beijing. Beijing’s calculation seems to be to prevent Taiwan
independence in the near term, then bring Taiwan “back to China,” even
if it takes 40 or 50 years. MM Lee said he is looking forward to
visiting Fujian Province, where preparations are underway for a new
southern economic area linked with Taiwan.
Xi Jinping
----------
¶14. (C) The Deputy Secretary asked if in the future a leader like Xi
Jinping would continue the policies on Taiwan followed by Hu Jintao. MM
Lee responded affirmatively. Xi is a princeling who succeeded despite
being rusticated. When the party needed his talents, Xi was brought in
as Shanghai Party Secretary. Xi is seen as a Jiang Zemin protege, but in
another three and a half years Jiang’s influence will be gone. The focus
now is on maintaining the system. There are no more strongmen like Deng
Xiaoping. Jiang did not like Hu, but could not stop him, because Hu had
the backing of the system and he did not make mistakes.
Wang Qishan
-----------
¶15. (C) MM Lee said Vice Premier Wang Qishan, whom the MM saw in
connection with celebrations in May of the 15th anniversary of
Singapore-China Suzhou Industrial Park, is an exceptional talent, very
assured and efficient. Wang handled SARS superbly when he was in Hainan.
He excelled in coordinating the Beijing Olympics. Li Keqiang may not get
the Premiership and the Party is looking for a way to keep Wang on past
his 65th birthday until he is 70. MM Lee said he had met first Wang back
in the 1990s but had forgotten their meeting. This time when they met,
Wang told Lee he had reviewed the records of all Lee’s meeting with
Chinese leaders going back to the days of Deng Xiaoping to see how Lee’s
thinking had developed. Wang told Lee he respects him as a consistent
man.
China’s Rise
------------
¶16. (C) MM Lee said China is following an approach consistent with
ideas in the Chinese television series “The Rise of Great Powers.” The
mistake of Germany and Japan had been their effort to challenge the
existing order. The Chinese are not stupid; they have avoided this
mistake. China’s economy has surpassed other countries, with the
exceptions of Japan and the United States. Even with those two
countries, the gap is closing, with China growing at seven-nine percent
annually, versus two-three percent in the United States and Japan.
Overall GDP, not GDP per capita, is what matters in terms of power.
China has four times the population of the United States. China is
active in Latin America, Africa, and in the Gulf. Within hours,
everything that is discussed in ASEAN meetings is known in Beijing,
given China’s close ties with Laos, Cambodia, and Burma, he stated.
¶17. (C) MM Lee said China will not reach the American level in terms of
military capabilities any time soon, but is rapidly developing
asymmetrical means to deter U.S. military power. China understands that
its growth depends on imports, including energy, raw materials, and
food. This is why China is working with South Africa on the China-Africa
Development Fund. China also needs open sea lanes. Beijing is worried
about its dependence on the Strait of Malacca and is moving to ease the
dependence by means like a pipeline through Burma.
Build Ties with Young Chinese
-----------------------------
¶18. (C) MM Lee said the best course for the United States on China is
to build ties with China’s young people. China’s best and brightest want
to study in the United States, with the UK as the next option, then
Japan. While they are there, it is important that they be treated as
equals, with the cultural support they may need as foreigners. Why not
have International Military Education and Training (IMET) programs for
China? Why not have Chinese cadets at West Point alongside Vietnamese
cadets and Indian cadets? America’s advantage is that it can make use of
the talent of the entire world, as in Silicon Valley. China still tends
to try to keep the foreigners in Beijing and Shanghai. MM Lee noted that
his own experience as a student in the UK had left him with an enduring
fondness for the UK. When he spent two months at Harvard in 1968, an
American professor had invited him home for Thanksgiving. This was not
the sort of thing that happened in the UK, and Lee had realized he was
dealing with a different civilization. In the future, China’s leaders
will have PhDs and MBAs from American universities, he predicted.
¶19. (U) The Deputy Secretary has cleared this message.
Visit Embassy Singapore’s Classified website:
http://www.state.sgov.gov/p/eap/singapore/ind ex.cfm
SHIELDS

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