 Welcome to Prime Minister Lee Sanlong, Prime Minister Lee. It's a great honor for us to have you here. The story of your country is remarkable. As you know, Singapore gained its independence in 1965. The year I was born, nearly 55 years ago. Since then, it has grown from a small British trading colony to one of the world's most sophisticated economies in the span of a generation. Back in 1965, per capita in Singapore was $500 US. Today, per capita, is $65,000 US. That represents, I guess, around 9% annual growth. You became a Prime Minister in 2004. You are the third Prime Minister of your country. Also shows the stability. And I have been leading the country for 16 years. We know that there is a lot of things happening in the region. But this is definitely Asia's century. For the first time, 50% of the global GDP is coming from Asia. And Singapore's leadership is crucial. So I think all the people coming here, looking forward to hear your views, Mr. Prime Minister, on the geopolitical outlook, aspirations for Singapore's years. Welcome. Thank you, Brittany. Thank you for your very generous remarks on Singapore. We have done reasonably well over the last half century. We worked hard for that, but there were some external factors which were very important to us. And I will just mention three of them. The United States, China, and globalization. The United States was critical because it generated peace and stability and security throughout the Asia Pacific over this last half century. Vietnam War, not the standing, it has been a benign, constructive influence, generating an environment where countries like Singapore, small ones, can participate and prosper and compete and have our place in the sun. At the same time, the United States was also a major source of investments and a major market for us because they kept the economy open and they believed that by being open and by being welcoming of the growth and prosperity of others, the US gained. China also was a major factor in our success because over the last 40 years, China reformed and opened up. And grew steadily, even faster than Singapore. Our engagement with them deepened. Trade volumes increased dramatically. Investments in China grew hugely. Singapore, according to the Chinese statistics, is the biggest source of foreign investments in China through Singapore. I think some of them must be other companies based in Singapore, but nevertheless it shows the depth of the relationship. Tourism members grew. The engagement generated confidence, lift, and a certain vibrancy throughout the whole region, which Singapore benefited hugely from. Thirdly, we benefited from globalization because world trade was buoyant and because people did business with one another, increasingly openly, there were trade rounds, there was a Uruguay round. The WTO played a constructive role, although not always effortlessly, but we plugged into the global economy and that enabled a small country to be productive. And so the policies we made could work. Now we are at a turning point. All three of these factors are changing. The United States, in terms of security, I think the security balance, strategic balance in the region is shifting because China has become more influential and more substantial a participant and other countries too, I mean the North Koreans are a major preoccupation because they have nuclear capabilities. And America itself is asking the question whether they are carrying too much of a burden for this and pushing, wanting their allies to take on more of a responsibility, at least for financing, the cost of this common security. On economics too, the Americans have shifted their attitudes. I think there is much more concern about impact on American workers, much more concern about other countries taking advantage of America, seeing this as a free rider problem rather than one where America is holding the ring and being open, benefiting others but in the process benefiting itself. So that is a major change. We do not know that it is irreversible but it is certainly a very fundamental shift of stance. The Chinese position has also shifted because as they have grown, they have become much more influential, much more advanced in their development. Their role in the international economy has changed substantially. Their influence has grown and their relations with other countries and in particular with the United States has become more difficult to manage. And therefore, whereas it was previously effortless to say I am friends with everybody and including friends with the United States and with China, now we still want to be friends with everybody but you are pushed to be better friends with one side or the other. So that is a change in the world. I think a lot of Europeans understand that. The smaller you are, the better you understand it. The third factor, globalization is also shifting. You discuss it all the time here because people worry about the impact on disadvantaged groups, people worry about the impact on the environment, people worry about the uncertainties which are generated because we are so interrelated and people are anxious about the ups and downs which we no longer have a buffer to protect ourselves against. And in this environment, Singapore has to look forward for more than another 50 years and find a way forward to navigate them. What do we do? With America, we remain very good friends. They are a major security cooperation partner with us and I think we continue to believe that they have an important role in the region to foster stability and security. No longer alone but still an indispensable role because the Chinese cannot play the role the Americans do, the Japanese neither. And so we would like to continue to work with America, we would like to continue to work with China. From time to time, you will find yourself being pressed to choose sides and when we do have to make a stand, I think it is very important that people understand that Singapore's choices are on its own behalf because we are making decisions for Singapore and not because we are a cat's paw for one side or the other. And that means you must have the courage to stand up and call things as they are and from time to time you will incur, well, at least a raised eyebrow and sometimes more than one raised eyebrow from one side or the other and occasionally both. It is necessary to do that because once people no longer think that you are a serious interlocutor calculating on your own behalf, you are written off your finish. With China, we also have a big account. In fact, China is our biggest trading partner as it is for everybody else in the region including all of America's allies and we hope when we see that it is possible for China to adjust its position, taking into account its new, very strong influence in the world in order to integrate in a peaceful and constructive way into the global order which it depends upon. Whether it is through the One Belt and Road Initiative, whether it is through the Asia Infrastructure Investment Bank or other diplomatic initiatives, I think China will have a major role to play and Singapore hopes that we will be able to cooperate with them and participate and encourage them to engage in a way which leaves space for other countries to prosper, to set their own path and in the long term to welcome a new major player and not feel that this is an elephant in the room which may not notice who else is there and what may be under foot. On globalization, I think notwithstanding the pressures and the problems, we have no choice but to continue to bet on countries cooperating closely with one another because if five and a half million or six million people in Singapore have to grow our own food and make our own computers and make our own banking and living, I think we will starve. It is not possible. But to prosper in such a new globalised but troubled environment, we have to up our game, raise our capabilities, bring in new investments which will connect us to centres of vibrancy and prosperity all over the world. Europe, America, Japan, China, Latin America and Africa because there are many spots of vibrancy and future growth there and link us in a way where we make a contribution because we can do things in Singapore which is not so easy to be done all together in one place, any other single place. And that means we have to upgrade our companies, upgrade our people, education, skills and have the environment where we can. Welcome in very high quality investments, operations, R&D centres, places where high quality people want to live, want to work, want to be. And it is not just costs but it is also the whole environment, the safety, the security, the confidence, the opportunities, the vibrancy. That is what Singapore needs to be. And amidst all this, we have to look after our own people. Make sure that all these good things which happen in the world benefit not just Singapore but benefit Singaporeans across the board so that they are able to take advantage of the jobs we create so that they are able to fend for themselves against global competition so that if one industry is declining which will happen from time to time, the people there are given the help and the support and the time to gain new skills and transfer their employment to another industry, another job and be able to make a living for themselves and not feel that they are fending for themselves on their own and that the system is not on their side. This system has to work for them because if it doesn't work for them, the system will fail. And in Singapore, it must not fail because we only have one chance to succeed. Thank you. Thank you, Mr Prime Minister. Thank you very much for this tour de horizon. There are so many questions that could be raised. Let me start with the global risk report that the World Economic Forum does every year. The top concern by experts and business leaders in the survey that we just published last week, short term, was geopolitical polarization and trade wars having also a negative impact on global growth. IMF came out with their adjusted numbers for global growth this year and were more bearish than in the last report. Mr Prime Minister, do you feel that there are still challenges related to geopolitical confrontations and competition? Or do you see that we maybe it has peaked with the signing of the first part of the trade agreement by US and China in this year last week? We are relentlessly optimistic but not that much so. No. I don't think it has peaked at all. It is a very serious issue. How does an incumbent hyper power in the United States accommodate a rising new power, China, which is going to grow as a percentage of the world GDP, which is going to grow and develop in terms of the sophistication of its economy and which in absolute size is going to become larger than the United States although not more advanced than the US for many years to come. But it will become larger very soon if it is not already. And how do both sides make the adjustments in order to accommodate each other and head off what Graham Allison calls the Thucydides trap? And it is not at all obvious that it is easy to do because both sides have domestic pressures. Both sides primarily are calculating the next election or the next domestic political succession and those domestic pressures do not naturally factor in a global strategic stable balance. So already you see the consequences because the counter tariffs have reduced trade, has reduced welfare and the uncertainty of the conflict has meant that investments have been affected and business decisions are being put off because you don't know, you can't count on the future. And the prospect of bifurcation in technology whether it is on 5G or on the whole supply chain, that will cause, I don't trust you, therefore you don't trust me, therefore I cannot rely on your products and therefore you must develop your own supply chain. It will take a long time for that process to come to run its course but it is a very expensive process which is going to hurt us. I was talking to one industrialist yesterday and he said, well, we make, say, medical equipment, MRI machines. In an ideal world you make it in one place and you supply the whole world. If we bifurcate, we can put one manufacturing centre for Asia and China, one manufacturing centre for America and it will cost us some but we won't die. I said that's fine if you are making the same MRI machine in both places but if they need different chips and different software and if the next time I find an MRI breakthrough I'm not going to share with you because that's a national security threat to me, then I think it will cost us and I think you're not there yet but you're not heading away from that direction. Mr Prime Minister, you're right that G2 also called that. US and China is more than 40% of the global GDP so it really matters what is coming out of that cooperation or competition. I feel also that it is also a competition about the new technologies following the fourth industrial revolution. I guess both Beijing and DC has understood that those countries that are on top of these technologies will also come out of this century as some of the most influential countries. How worried are you and you already touched on it, this decoupling piece because today they have been competing but if you go for different systems and you don't follow a path where this is compatible that can also have a quite significant negative impact on long-term growth and then countries will have to choose. Singapore has then to choose the Chinese system or the American system and I think Europe can easily end up in the same dilemma. Today I'm here talking to you. We have two mics for backup and they're both the same system. One day I may need to have one which is an American system and one which is not an American system and I don't think that's a better world to be in because it's not just that it's going to cost us more but the mutual suspicions and the anxieties which is going to be created. Did he design his own? Did he borrow my design? Did he reverse engineer mine? Or did he entice my person over in order to carry the IP along inside his brain? All these mutual suspicions and doubts are going only to create more frictions, more problems. The optimists say that you're so integrated that pulling it apart is unthinkable but I don't take quite such an optimistic view. I think it makes it very hard but such things do happen before and if you do try to happen, the consequences are very, very, very bad. Before the First World War, the European countries were all very integrated together. The economies were integrated together. The colonies traded with one another and people thought this was the future, globalization but that didn't stop miscalculations and tensions from building up and the First World War from breaking out disastrously beginning with what should have been a minor incident. And so we've had 50 years generally of peace. Can you bet on another 50 years generally of peace? I think that the odds are not negligible. A lot at stake, so you're moving from a prospered-dine-neighbour to a beggar-dine-neighbour approach, no? Well, nobody says that. Everybody says I want to prosper my neighbour but I have to think about my people first. Singapore already saw last year quite a significant slowdown in your growth. I think you had 0.7%. You're more optimistic about this year and the hit last year were you paying a price already for these trade wars? Some of it was from slower trade, export markets were less buoyant, some of it was because of electronic slowdown, which was global. There are some prospects the electronic slowdown will turn round this year. The people in the industry are reasonably optimistic. What we are not sure this year is where the US economy is going. Doesn't look like it is going into a recession but nobody has a very good record predicting when the economy is going to recession. A lot of numbers last day, yesterday you heard probably from President Trump, very positive numbers. Oh yes, I have no doubt, but does that predict the future? And you never know. The turning point, when does the mood change and all of a sudden the people's perspectives shift and say, how silly of me, why didn't I see this before? And by that time everybody else has got into a new psychology and things turn. It may not happen this year. If you ask the best opinion, they say chances are not but the chances are not negligible. But the key thing is if you have the strategic tensions not being resolved and flaring up again downstream, which can happen, then it is not just an impact on the business cycle, it is an impact on the long-term trajectory of the world. We are witnessing a kind of synchronized global economic slowdown but we are not seeing any kind of recession at this point. But if there is a recession in the coming years, how worried would you be that we have so limited tools to fight the recession? You know, can you have more than zero interest rate? You can of course go a little bit further with quantitative easing. How much of a fiscal muscle is there globally when many countries are already running with big deficits? And what was the lesson learned from 2008? G20 came together and agreed on very unorthodox tools. Would it be possible to get the same players in the same room and agree on anything these days? Well, that depends on your view. Whether things have turned sour because the relationship has soured or whether they work less well together because the crisis is less urgent. If it is the former and you go into a crisis and we are not on good terms, well, we have a problem, we cannot cooperate. But if we are squabbling because things are not grave, then when things become grave and minds are concentrated, perhaps we will have no choice but to work together again. I have to hope so. I do not know whether central bankers have run out of ammunition. They say so. But central banks are not the only policy instrument which governments have. You also have fiscal policy and there are limits, but in fact they are very respectable and eminent economists like Larry Summers who argued that in the last downturn and in the recovery fiscal policy was not used enough and people were too worried about running deficits whereas you should have run the deficits and spent the money wisely. Not just to feel good or to boondoggle but to invest in infrastructure education, things would make a difference, improve your productive capacity and then the economy will recover and then in a way you have got something of a free lunch. I do not generally believe in a free lunch but I do believe there is a role for fiscal policy. And there are countries that still have huge fiscal muscles, though. Quite large economies. Germany, for example, has got a very balanced budget but they have very deep institutional and collective memories of hyperinflation and they do not wish to go in that direction. They have destroyed the nodal in the law, the zero, black zero. Well, that is not a bad discipline to impose on ourselves. I mean, in a way Singapore has that rule too, not year by year but term by term of government. Namely that this government, if you are going to run a deficit, you have first to earn the money. Then the next year you can run a deficit. But you cannot say, last term of government ran a surplus and so I can now afford to run a deficit, the country is rich. And I think that is a valuable discipline but you have to apply it in a way which is appropriate to the situation. And I think the 2007-2008 economic crisis, the global financial crisis, in that situation, if you navigate by rules, the chances are you will run into an even more serious problem. And maybe if there are no tools and no agreements, you could run into a situation maybe not with such a deep recession but a much longer one like we had in the 70s that was very bigger growth. Or in the 30s because what happened in the 30s was tariffs and counter-tariffs and smooth holly in America. And one of the things that G20 did after the global financial crisis was to say we shall not go for this tariff retaliation or competitive devaluation. And we shall be in this together, let's try to reflate together, let's bring our monetary policy down and try and coordinate that. And you do need that kind of coordination worldwide. We can't all be running trade surpluses. Whom are we going to be having surpluses against? Antarctica. Thank you also for reminding us about the history. We do remember from the history books that in the 30s the global trade fell with 50% and the global GDP in a few years fell with 25% and we got a real depression. So there is a lot at stake. Followed by a war. Yeah. There is a lot at stake. I mean, I don't think we will repeat our follies in the same way but it is quite possible for us to be inventive in making new mistakes. Do you see any silver linings? Well, if you look at the tech sector, there is tremendous vibrancy and optimism and everybody believes they are going to change the world. They are not all right but some of them will not be wrong. And if you look at things like Google or Amazon or so many of the tech companies or Microsoft which did not exist 30 years ago and which were not dominant 20 years ago, they are now major players in the world. So nobody knows what the major participants are going to be 20 years from now and they are going to generate new opportunities but they are also going to generate new problems. When social media came along, everybody said this is marvellous. This is a way to democratise that debate and everybody has a voice and now we shall have an egalitarian participative. Basically Nirvana will have a right and now we see what it is like. It doesn't look like Nirvana. Can democracy survive social media? I do not know whether it is democracy surviving but how will human societies adapt to this? Human societies over many, many centuries have developed to have circuit breakers. I mean, a view, an idea develops, it catches fire, a few more people pick it up, it gets tested, other people may or may not pick it up. Things take time, gradually evidence accumulates and then some fail, some succeed and you move forward. Now all that is short circuited into one fraction of a second. At the length of time it presses your button, time to press a button for either a Facebook post or a Twitter tweet. And when you speed up the operating cycle like that by 100 or 1,000 or 10,000 times, the operating system will malfunction. Human beings are not meant to work like that. Your brain doesn't speed up 10,000 times. You need time to hoist things in, to mull it over, to think it, to think it, discuss it, to test it and gradually to get some gray hair and then you have some better decision about it. And if you throw all that out of the window, I think you need to be very confident you know what you're doing. And I'm not sure that we actually have an answer to that question. These platform companies, scale and size is everything. When the winner takes it all in a platform economy, how do you think smaller countries and medium-sized economies will cope with this? If we can participate in the global economy, then we are part of it. I mean, in Singapore we have a lot of the major platform companies are all in Singapore. Google is there, Facebook is there. The data centres are there, the engineers are there. We are not, we don't have very many unicorns of our own, but we are part of the global economy and part of these major participants. And if there are proper rules which protect participants big and small in this environment, then I think we make a living. If there are no rules and all of a sudden you have a Twitter storm or something befalls you in the middle of the night, next morning you wake up and you find you've been devastated, it can happen. Prime Minister, thank you so much. I think I'm speaking on behalf of all the participants. I would love to continue another 50 minutes to get your insights, but everything good also has to come to an end. Thank you so much for joining us and thank you for your leadership. Thank you. Thank you, Bob.