SM Teo Chee Hean at the ThinkChina Forum 2025

Distinguished Guests
Ladies and Gentlemen

Introduction

It is a pleasure to be here once again at the venue where ThinkChina was launched in 2019. I particularly like the little red dot in the ThinkChina logo, which has a special significance.

As I said then, ThinkChina is an insider, but with an outsider’s perspective on China. This is of great value to those unfamiliar with the Chinese language, but who are nonetheless deeply interested in developments in China.

The question of today’s forum is: China’s future in this changing world. And this is an important question.

China is large and complex. And there is also now a great deal of uncertainty in global affairs. So it is unlikely that we can arrive at any definitive answers. Much depends on the choices that China, and other major actors, make. What we can do, however, is to establish a conceptual framework, a structure of thinking, to help us think about this question, and to put the events that we observe in context.

Beyond the End of History

China's opening up and the unipolar moment that arose at the end of the cold war resulted in a period of remarkable growth for China. In the short span of just four decades, China lifted 800 million of its citizens out of poverty. Its tier one cities are now among the most dynamic and prosperous in the world.

The benefits of China’s growth went far beyond its borders. China’s economic expansion has been a major engine of global growth. And as the factory of the world, China brought cheaper goods into the homes and workplaces of people everywhere.

China is now in a more mature phase of growth. This has its attendant challenges. But we have also gone beyond the supposed “end of history”, and so China now finds itself facing a much more complex external environment.

To make sense of this, we can examine the internal and external driving forces that China must contend with; the policy choices that China will face domestically; and on the international front, how China and the rest of the world’s decisions and actions interact with each other.

Internal Factors

Domestically, China faces structural challenges, and these challenges are not unique to China. They arise whenever countries transition from developing to developed status. But what China faces is more acute than most because of the rapid pace and the scale of its development.

One major factor is demographics. China’s population peaked and began falling in 2022. India’s population has now overtaken China’s. China’s workforce has been shrinking since 2015. Unlike other Asian countries which still have younger populations like India, Indonesia, and Vietnam, this phase of China’s demographic dividend has passed.

Things are just as challenging on the other side of the dependency equation.

China is ageing faster than almost all other countries in modern history. More than 20 million workers will retire each year over the next decade. By 2040, almost 30% of the population will be 60 or older. Concerns surrounding retirement – retirement adequacy, demand for healthcare, and other social pressures – from a fast-ageing population will inevitably grow.

A second factor is rising expectations. A more prosperous society invariably has more complex and varied demands. As an example, it is hard to expect that older Chinese will be satisfied with medical treatment from the “barefoot doctors” they experienced in their youth, and certainly the younger generations of Chinese expect much more from their healthcare providers.

There is also the specific challenge of providing employment for a workforce with a much greater proportion of university graduates. Last year, China produced a record 11.8 million graduates, double what it was just a decade and a half ago – many of them in STEM subjects. A more educated population represents a great deal of potential, but it can become a headache if expectations about jobs, economic opportunities and quality of life are not met. I remember having a discussion with Chinese Vice Premier Mr Li Lanqing, who was responsible at that time for expanding the education opportunities and the percentage of Chinese students going for higher education. He said this is what they want. So I said this certainly will bring benefit to China, but you must be careful that it may not make them happier. That is a different matter altogether.

So this brings us to China’s first set of choices.

On domestic matters, China is best placed to choose the strategies it believes will help drive the high-quality economic growth it desires, and maintain the compact between the people and their government. It has tackled corruption, including in high places, and inflation is manageable.

The PRC government has identified various areas in need of domestic policy reform, and is actively working on them. These include: (i) a plan to raise retirement ages over the next 15 years; (ii) greater efforts to develop the silver economy; (iii) reorienting economic activity to increase domestic consumption; (iv) increasing productivity and reducing the need for labour through automation, robotics and AI; and (v) measures to improve the sustainability of local government finances and to stabilise the property market.

China’s success in overcoming even larger challenges over the past forty years of reform and opening up provides optimism that it will succeed in this endeavour. These are not small challenges. Ultimately, a stable, growing, and prosperous China has significant spillover benefits for our region, and for the world.

External Factors

So let us now look beyond China’s borders.

China’s rise has dramatically altered the nature of its external relations.

Compared to almost a quarter century ago when China joined the WTO as a developing economy, China is now a large and technologically advanced economy, and a large trading and export economy.

China’s military power has also grown. Let me provide some perspective on this. There are five permanent members in the UN Security Council. US defence expenditure at around USD 800, 900 billion a year, is larger than the other four UN Security Council permanent members together. But excluding the US, China’s defence expenditure at about USD 250 billion is about equal to the other three permanent members combined – even given that Russia has tripled its defence expenditure since the start of the Ukraine War.

China is now top in several technology areas. It has cornered the market in green tech. And based on the Australian Strategic Policy Institute’s Critical Technology Tracker, China is the leader in scientific and research innovation in 57 out of 64 critical technologies. This is a stunning development from just two decades ago, when the US led in 60 out of 64 critical technologies.

China’s standing up （站起来）, becoming rich （福起来）, and now aspiration to become strong （强起来）, is understandable. But China must expect other countries to react and respond to these changes.

Most countries no longer consider China a developing country. This shapes their expectations for their dealings with China, in particular in their trading relations with China, and for China to step up and play a greater role in addressing global issues.

It is in this context that China faces a second set of choices, which pertain to its relations with other countries and the international community as a whole. These include: (i) trade policy; (ii) intellectual property policy; (iii) industrial policy for technology development, production, and export; (iv) how China manages its relations with the countries along its borders, in particular territorial disputes involving overlapping claims; and (v) how it employs both hard and soft power to influence global security and economic affairs, and to maintain access to resources and markets.

US-China Relations

China’s approach to these foreign policy questions will affect its relations with other countries, and most consequentially with the US.

Overall, however, the fundamental question for China, and for its dance partner, the US, is: What kind of world do we aspire to? One where one country seeks primacy, even dominance, over all others, out of a desire to be able to set the rules to its own advantage, or out of fear of being dominated by others. Such an approach is inherently zero-sum.

President Xi Jinping wrote in his congratulatory message to President Trump on the latter’s re-election: “History tells us that both countries stand to gain from cooperation and lose from confrontation”.

Acknowledging the benefits from a collaborative approach is a good start point. But for both sides to act in accordance with it is quite another. A country can demonstrate strength through confrontation, or it can choose to demonstrate strength and self-confidence through cooperation. For now, unfortunately, both sides seem to be demonstrating strength through confrontation rather than cooperation.

The implications of this choice – to be dance partners or battling gladiators – are seismic.

Between the US and China, there are effectively three categories of issues. First, those that can lead to major conflict, dark red lines, like Taiwan. Second, issues where there are differences, even deep differences but ought not to, on their own, lead to conflict. Trade imbalances, protectionist policies, drugs, and intellectual property protection. They can be negotiated. Third, the issues of the global commons, such as climate change and pandemics, where cooperation is needed and inherently win-win.

Both sides have declared that they do not seek nor want war with the other. If that is the case, then both sides should work to manage that first set of issues. This would provide the foundation to constructively address the second set of issues, and to cooperate on the third.

But if one side or the other, or both, believe that confrontation and conflict is inevitable, then the second and third set of issues are merely bargaining chips to be accumulated in preparation for a conflict.

Implications for Smaller Countries

So what does this mean for the rest of us, particularly in our part of the world?

We must expect that each country big or small, will want to advance its national self-interest. However, we should differentiate between narrow, and often short-term self-interest, as compared to wider, enlightened, and longer-term self-interest.

Engagement on a mutually respectful and beneficial basis is more likely to be productive and successful, and lead to long-term partnerships, and not just short-term advantage.

The major countries should therefore engage with each of the countries in Southeast Asia, and our region as a whole, on our own merits, and not merely through the lens of the competition between themselves, the bigger countries.

As small countries, we cannot dictate what big powers choose to do, but on our part, as smaller countries we do have agency.

Singapore has good relations, including FTAs, with the US and the China. We also partner like-minded countries, and have built a wide network of FTAs, including with the Gulf Cooperation Council, the EU, UK, Mercosur, India, Japan, Australia, New Zealand, and the Eurasian Economic Union, which includes Kazakhstan and Kyrgyzstan.

The current global uncertainties have provided added motivation for countries to tie up with each other. India is one country that can potentially benefit from this, as it is being sought out as a partner variously by the UK, the EU, the GCC, and New Zealand, among others.

As a region, we can strengthen our own unity and resilience. Both nationally, and as ASEAN. This will enhance our ability to respond, whichever world we end up in.

We should also continue to grow linkages and partnerships that include the US, China, both, and neither, so long as they have an open orientation and welcome economies which subscribe to the same principles, and are prepared to abide by the same rules. So if you look at the combination of IPEF, RCEP, APEC, and the CPTPP – these are just four examples - respectively, they include the US, China, both, and neither. The CPTPP in particular welcomed the UK as its first non-original member at the end of last year, extending its geographical reach beyond the “Trans-Pacific”.

These bilateral, multi-lateral, and mini-lateral relationships are building blocks that can provide an environment where trade and investment continues to flow relatively smoothly.

Conclusion

What is the larger context? What is the larger picture? Forty years ago, in October 1985, Mr Lee Kuan Yew, then Prime Minister of Singapore, had the honour of addressing the Joint US Houses of Congress. He reflected upon the forty years since the end of the Second World War, and what kind of world we might see in the 21st Century.

Mr Lee said, and I quote, “… There are two scenarios for the 21st Century… For 40 years the maintenance of political boundaries was made possible because thrusting, and usually aggressive, peoples have been able to fulfil their drive to better their lot through trade. If this method for adjustment and accommodation between societies moving at different speeds is no longer possible, then a return to the traditional ways of conquest or influence is likely.” End quote.

Another forty years have passed since 1985, and we are now living in the 21st Century. And these reflections remain valid today, and are relevant to the decisions that we take in each of our own countries.

We all aspire to a peaceful and prosperous world, and better lives for our peoples. The path we take is in our hands.

A deeper understanding of US-China relations for both sides, and for the rest of us affected by it is crucial.

And Singapore is therefore glad to serve as a meeting point for those in Asia and beyond, to exchange opinions and gain new perspectives on these crucial issues.

Today’s ThinkChina Forum adds another platform for such exchange, and complements the body of perspectives offered by the more than 500 authors in ThinkChina’s stable of contributors.

I look forward to the panel and hearing your perspectives. Thank you very much.