Adapted from Lee Kuan Yew: The Grand Master’s Insights on China, the United States, and the World. Interviews and selections by Graham Allison and Robert D. Blackwill, with Ali Wyne. To be published by The MIT Press, February 2013. Copyright 2013 Belfer Center for Science and International Affairs. All rights reserved.

Q. Are Chinese leaders serious about displacing the U.S. as the No. 1 power in Asia and, eventually, in the world?
A. Of course. Why not? They have transformed a poor society by an economic miracle to become now the second-largest economy in the world—on track, as Goldman Sachs has predicted, to become the world’s largest economy. They have followed the American lead in putting people in space and shooting down satellites with missiles. Theirs is a culture 4,000 years old, with 1.3 billion people, with a huge and very talented pool to draw from. How could they not aspire to be No. 1 in Asia, and in time the world? The Chinese people have raised their expectations and aspirations. Every Chinese wants a strong and rich China, a nation as prosperous, advanced, and technologically competent as America, Europe and Japan. This reawakened sense of destiny is an overpowering force. Unlike other emergent countries, China wants to be China and accepted as such, not as an honorary member of the West. The Chinese will want to share this century as coequals with the U.S.

Q. How will China’s behavior toward other countries change if China becomes the dominant Asian power?
A. At the core of their mindset is their world before colonization and the exploitation and humiliation that brought. In Chinese, “China” means “Middle Kingdom,” recalling a world in which they were dominant in the region, when other states related to them as supplicants to a superior and vassals came to Beijing bearing tribute. Will an industrialized and strong China be as benign to Southeast Asia as the U.S. has been since 1945? Singapore is not sure. Neither is Brunei, Indonesia, Malaysia, the Philippines, Thailand or Vietnam. We already see aChina more self-assured and willing to take tough positions. The concern of America is what kind of world they will face when China is able to contest their preeminence. Many medium and small countries in Asia are alsoconcerned. They are uneasy that China may want to resume the imperial status it had in earlier centuries and have misgivings about being treated as vassal states having to send tribute to China as they used to in past centuries. They tell us that countries big or small are equal; we are not a hegemon. But when we do something they do not like, they say you have made 1.3 billion peopleunhappy. So please know your place.

Q. What is China’s strategy for becoming No. 1?
A. The Chinese have concluded that their best strategy is to build a strong and prosperous future, and use their huge and increasingly highly skilled and educated workers to outsell and outbuild all others. They will avoid any action that will sour relations with the United States. To challenge a stronger and technologically superior power will abort their “peaceful rise.” The Chinese have calculated that they need 30 to 40—maybe 50—years of peace and quiet to catch up, build up their system, and change it from the communist system to the market system. They must avoid the mistakes made byGermany and Japan. Their competition for power, influence, and resources led in the last century to two terrible wars. The Russian mistake was that they put so much into military expenditure and so little into civilian technology that their economy collapsed. I believe the Chinese leadership has learned that if youcompete with America in armaments you will lose. You will bankrupt yourself. So, avoid it, keep your head down, and smile for 40 or 50 years. My first reaction to the phrase “peaceful rise” was to tell one of their thinktanks, “it is a contradiction in terms; any rise is something that is startling.”

Q. What are the major hurdles in executing that strategy?
A. There will be enormous stresses because of the size of the country and the intractable nature of the problems: the poor infrastructure, the weak institutions, the wrong systems that they have installed, modeling themselves upon the Soviet system in Stalin’s time. Straight-line extrapolations from [their] remarkable record are not realistic. China has more handicaps going forward and more obstacles to overcome than most observers recognize. Chief among these are their problems of governance: the absence of the rule of law, which in today’s China is closer to the rule of the emperor; a huge country in which little emperors across a vast expanse exercise great local influence; cultural habits that limit imagination and creativity, rewarding conformity; a language that shapes thinking through epigrams and 4,000 years of texts that suggest everything worth saying has already been said, and said better by earlier writers; a language that is exceedingly difficult for foreigners to learn sufficiently to embrace China and be embraced by its society; and severe constraints on its ability to attract and assimilate talent from other societies in the world.

China will inevitably catch up to the U.S. in absolute GDP. But its creativity may never match America’s because its culture does not permit a free exchange and contest of ideas. How else to explain how a country with four times as many people as America—and presumably four times as many talented people—does not come up with technological breakthroughs?

Technology is going to make their system of governance obsolete. By 2030, 70% or maybe 75% of their people will be in cities, small towns, big towns, mega big towns. They are going to have cellphones, Internet, satellite TV. They are going to be well-informed; they can organize themselves. You cannot govern them the way you are governing them now where you just placate and monitor a few people because the numbers will be so large.

Q. How do China’s leaders see the U.S. role in Asia changing as China becomes No. 1?
A. The leadership recognizes that as the leading power in the region for the sevendecades since World War II, the U.S. has provided a stability that allowed unprecedented growth for many nations including Japan, the Asian Tigers and China itself. China knows that it needs access to U.S. markets, U.S. technology, opportunities for Chinese students to study in the U.S. and to bring back to China new ideas about new frontiers. It therefore sees no profit in confronting the U.S. in the next 20 to 30 years in a way that could jeopardize these benefits. Rather, its strategy is to grow within this framework, biding its time until it becomes strong enough to successfully redefine this political and economic order.

In the security arena, the Chinese understand that the U.S. has spent so much more and has built up such advantages that direct challenges would be futile. Not until China has overtaken the U.S. in the development and application of technology can they envisage confronting it militarily. What are the Americans going to fight China over? Control over East Asia? The Chinese need not fight over East Asia. Slowly and gradually, they will expand their economic ties with East Asia and offer them their market of 1.3 billion consumers. Extrapolate that another 10, 20 years and they will be the top importer and exporter of all East Asian countries.

Q. What impact is China’s rise having on its neighbors in Asia?
A. China’s strategy for Southeast Asia is fairly simple: China tells the region, “come grow with me.” At the same time, China’s leaders want to convey the impression that China’s rise is inevitable and that countries will need to decide if they want to be China’s friend or foe. China is also willing to calibrate its engagement to get what it wants or express its displeasure. China is sucking the Southeast Asian countries into its economic system because of its vast market and growing purchasing power. Japan and South Korea will inevitably be sucked in as well. It just absorbs countries without having to use force. China’s neighbors want the U.S. to stay engaged in the Asia-Pacific so that they are not hostages to China. The U.S. should have established a free-trade area with Southeast Asia 30 years ago, well before the Chinesemagnet began to pull the region into its orbit. Economics sets underlying trends. China’s growing economic sway will be very difficult to fight.

Q. Will China become a democracy?
A. No, China is not going to become a liberal democracy; if it did, it would collapse. Of that I am quite sure, and the Chinese intelligentsia also understands that. If you believe that there is going to be a revolution of some sort in China for democracy, you are wrong. Where are the students of Tiananmen now? They are irrelevant. The Chinese people want a revived China. Can it be a parliamentary democracy? This is a possibility in the villages and small towns. The Chinese fear chaos and will always err on the side of caution. It will be a long evolutionary process, but it is possible to contemplate such changes. Transportation and communications have become so much faster and cheaper. The Chinese people will be exposed to other systems and cultures and know othersocieties through travel, through the Internet, and through smartphones. One thing is for sure: the present system will not remain unchanged for the next 50 years. To achieve the modernization of China, her Communist leaders are prepared to try all and every method, except for democracy with one person and one vote in a multiparty system. Their two main reasons are their belief that the Communist Party of China must have amonopoly on power to ensure stability; and their deep fear of instability in a multiparty free-for-all, which would lead to a loss of control by the center over the provinces, with horrendous consequences, like the warlord years of the 1920s and 1930s. I do not believe you can impose on other countries standards that are alien and totally disconnected with their past. So to ask China to become a democracy, when in its 5,000 years of recorded history it never counted heads—all rulers ruled by right of being the emperor; if you disagree, you chop off heads, not count heads.

Q. How should one assess Xi Jinping?
A. He has had a tougher life than Hu Jintao. His father was rusticated, and so was he. He took it in stride, and worked his way up. It has not been smooth sailing for him. His life experiences must have hardened him. He is reserved—not in the sense that he will not talk to you, but in the sense that he will not betray his likes and dislikes. There is always a pleasant smile on his face, whether or not you have said something that annoyed him. He has iron in his soul, more than Hu Jintao, who ascended the ranks without experiencing the trials and tribulations that Xi endured. I would put him in Nelson Mandela’s class of persons. He is a person with enormous emotional stability who does not allow his personal misfortunes orsufferings to affect his judgment. He is impressive.