China must change, warns Lee Kuan Yew

"Unless the system can adjust itself to meet the increasing demand on government, its legitimacy will be questioned," Singapore's Senior Minister told business leaders in Shanghai. "The most pernicious problem of all is corruption that has become embedded in the administrative culture; hard to eradicate.

"Not only will corruption severely impede economic progress, but more dangerously it is a political powder keg, a grievance around which anti-government sentiments can easily coalesce."

The 1989 demonstrations were not a call for democracy but were sparked by anger over corruption and inflation, he told the Fortune Global Forum.

Mr Lee, who once pushed Asian values in preference to Western democracy, said he now foresaw pressure from below bringing about political change, as it had done in other East Asian societies.

"The people's desire to have a better life is equal to that of the Japanese, South Koreans and Taiwanese in standards of living, quality of life and personal freedoms," he said.

Mr Lee predicted that China would grow into a huge economic power by 2050, when its economy would be four-fifths the size of the United States'. But it would take 100 years for mainland Chinese to reach Western standards of living.

At a press conference, Mr Lee also talked at length about the mainland's decision to pull out of a Sino-Singaporean business park outside Suzhou in Jiangsu province.

Mr Lee expressed surprise that despite personal assurances of support from Mr Jiang, the Suzhou authorities had done everything to undermine it in favour of their own park.