"If you try to influence the course of events in China by examples of there is a better system I would think that is not likely to win enthusiastic support (in Beijing)," Lee said during a visit to the southern Chinese enclave.

"If I were in Hong Kong today, I would stay and do business and I think you can do business in Hong Kong," Lee, now a senior minister in government, said at a business lunch.

Hong Kong and Beijing have been locked in a feud over the pace of democratic reforms in the territory with democrats pushing for direct elections, ruled out by Beijing last April.

This led to public uproar and a massive rally that saw half a million people take to the streets of Hong Kong last year demanding the right to select their own leader and entire legislature.

"Beijing has no intention of allowing Hong Kong to be a pacesetter or Trojan Horse to try the system in China," Lee said.

"You want peace, you want stability, you want growth, you want to shout your heart out but not at the system in China," he said.

Nevertheless, Lee said he believed Chinese leaders had helped to encourage economic growth in the territory by relaxing trading restrictions and easing travel restrictions.

"Please remember the same tap that was open can be shut," he warned.

Singapore and Hong Kong, both former British colonies, share a deep rivalry in their quest to be Asia's leading entrepot.

During his last visit in August Lee left leaders bristling when he said Hong Kong, which returned to Chinese sovereignty in 1997, would eventually lose its unique trading status as it was overwhelmed by the rest of China.

He also said that as a territory of China, Hong Kong would be unable to chart its own destiny.

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