How Singapore inspired Beijing HIROSHI MURAYAMA, Nikkei senior staff writer

March 26, 2015 12:00 am JST

How Singapore inspired Beijing

HIROSHI MURAYAMA, Nikkei senior staff writer

In this Nov. 12, 1978 photo released by China's Xinhua news agency, Lee Kuan Yew, left, welcomes then-Chinese Vice Premier Deng Xiaoping in Singapore. © AP

BANGKOK -- The man who guided China toward becoming the world's second-largest economy was not the country's former top leader, Deng Xiaoping, but rather Singapore's first prime minister, Lee Kuan Yew. Or at least this is one way future historians might describe China's rise.

     In the mid-1970s, the final years of China's Cultural Revolution, the country's development was grinding to a standstill. Under the Communist Party dictatorship, some members were oppressed on the pretext that they were counterrevolutionaries, throwing politics into turmoil. The inefficiencies of a planned economy resulted in widespread poverty. Recognizing these dire straits, Deng lit the torch of reform.

     But in the 1980s, Chinese leaders and scholars disagreed about what kind of country they wanted to build. Initially, Deng aimed to introduce market mechanisms into the economy and allow a certain degree of democracy. But others insisted on restricting public participation in politics. The latter camp saw authoritarianism as the key to stability and economic development.

     They found their ideal in Singapore, where de facto single-party rule was coupled with a thriving market economy. Some figured this method would work just as well for China, since Lee and many Singaporeans were of Chinese descent.

     China continued to waver between democratization and authoritarianism. A massive pro-democracy movement was met with the Tiananmen Square crackdown of 1989. Deng, however, persisted with reform and the country ended up with a regime that, in many respects, mirrored Singapore's. Chinese politics stabilized, at least on the surface, and the nation became the factory of the world.

     The Chinese model later came to be known as the Beijing Consensus, but it can be traced back to Lee.

     Now China is pursuing new reforms. Last year, the government announced that six state-owned enterprises, including China National Cereals, Oils and Foodstuffs, will be used as models. These companies will be transferred from state control to mixed ownership by a government-affiliated investment company and private investors. This promises to free businesses from rigid party control and put management in private-sector hands.

     The reforms, if fully implemented, would lead to companies resembling Temasek Holdings, a sovereign wealth fund backed by Singapore's government. The fund owns stakes in major companies such as Singapore Airlines.

      A crucial difference between the Singaporean and Chinese systems is corruption. Lee was known to have zero tolerance for it. China, however, is much larger, and the government failed to restrain graft -- though President Xi Jinping is now running an aggressive anti-corruption campaign.

     The jury is still out on the Singapore-inspired Beijing Consensus.