The current buzzword in Singapore is "Remaking Singapore". You may ask why, since Singapore has done well so far with our current model of economic growth.

The short answer is: we have reached the limits with this model of growth. Unless we reform the Singapore economy and build new capabilities, we will not be able to climb higher.

This is why we have changed many policies over the last few months, like income tax and the GST. We have also made changes to the CPF.

I know many of you are uncertain about these rapid changes, and concerned about your future.

Unfortunately, if we do not make these changes to our economy now, our future will be bleaker. Not only will our economy grow more slowly, it may even shrink. Restructuring the economy is like surgery. It is better to avoid it. But if we must have it, we have to tolerate the pain and discomfort in order to recover and be fit again.

We have to remake our economy because the world has changed. Let me illustrate with the case of China.

I first went to China in 1971 on NOL business. It took us four days to reach Beijing. We spent two days in Hong Kong, applying and waiting for our visas. On the third day, we took a train to Guangzhou, and spent a night there before flying to Beijing.

Today, however, you can fly direct to Beijing in 6 hours!

This is just one simple illustration of how much China has changed.

Our Speaker of Parliament, Abdullah Tarmugi, recently went to Shanghai for vacation. He was stunned by what he saw. He told me that Shanghai's development was scary. Many others have told me the same thing.

How do we make progress in this tougher world environment?

First, we have to build up skills and expertise to stay one or two steps ahead of our competitors. We will have to find new niche areas in which to make a living.

Next, we are linking up with other developed economies through free trade agreements. This will help us sell our products in their markets, and draw in foreign investments.

Thirdly, we must be more entrepreneurial. We must not just depend on MNCs. We must create wealth through our own ideas and patents, and our own international companies.

Lastly, we must find ways to ride on China's growth.

In this regard, I urge Chinese Singaporeans to encourage their children to work hard at learning the Chinese language. As China grows, the economic value of the Chinese language will increase.

We should aim to have most young Chinese Singaporeans speak social Mandarin fluently, and hopefully read Chinese newspapers as well. Some should be able to use Chinese for business, i.e., to read and write business letters and documents in Chinese, and negotiate in Mandarin.

Beyond school, we should encourage more students to pursue Chinese and China-related studies at university. Our universities will intensify their China-related programmes.

We must produce in every cohort a group of bilingual Chinese elite. This Chinese elite should not only be proficient in the Chinese language. They should be knowledgeable about Chinese history and culture, and have a good understanding of contemporary China - its politics, economics, and business environment.

Key to developing the next generation of Chinese elite is having enough good Chinese language teachers. They will determine whether we succeed in transmitting the Chinese language and culture to our young. We will have to marshal the necessary resources, including recruiting teachers from China if need be.

The Chinese community must help to keep the language and culture vibrant, so that our children are motivated to learn about them. It can, for example, set up scholarships and professorships in Chinese and China-related studies in the universities.

However, as we do more to promote Chinese culture and language, it is important not to forget our multi-racial society. The Chinese community must work closely with non-Chinese Singaporeans to make them feel at ease, and to remake Singapore for all.

Thank you.

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