From trade to trains, China and Singapore boost their economic ties
Economic cooperation between China and Singapore is expected to expand as Beijing rolls out its sprawling belt and road trade plan to boost infrastructure and trade links from Asia to Africa and Europe.
The two countries recorded US$66 billion in two-way trade last year, representing 13 per cent of Singapore’s global total, Industry Week reported.
Singapore is also China’s second-largest investor, with US$6.18 billion invested in the country last year, according to official Chinese data.
On Tuesday, when Singapore’s Prime Minister Lee Hsien Loong began a three-day trip to China, the two countries signed a memorandum of understanding to work together to help businesses resolve disputes that may arise under Chinese President Xi Jinping’s “Belt and Road Initiative”.
Here are five key areas where trade and economic ties are developing.
1 Kuala Lumpur–Singapore High Speed Rail
Hosting the visiting Singaporean leader on Tuesday, Chinese Premier Li Keqiang called for Lee and his government’s support for Chinese companies to develop a high-speed railway linking Singapore with the Malaysian capital Kuala Lumpur.
The 350km project – which will cost an estimated US$14 billion and is due to be operational by the end of 2026 – will be the first cross-country high-speed railway in Asia, connecting Singapore and Kuala Lumpur in 90 minutes.
Singapore and Malaysia plan to choose developers for the project by December next year and have already received interest from potential bidders and consortiums from Japan, China, South Korea and Europe, the Nikkei Asian Review reported.
Hong-Kong listed China Railway Signal & Communication, the world’s largest producer of railway traffic control systems, Japan’s JR East and Germany’s Siemens are among the list of potential bidders.
2 Government-to-government projects
Since the 1990s, Singapore and China have invested in three government-to-government projects in China: the Suzhou Industrial Park near Shanghai; Tianjin Eco-city in the country’s northeast; and the Chongqing Connectivity Initiative in the southwest.
Suzhou Industrial Park was launched in 1994 to strengthen cooperation between the two countries in the biomedical industry. It is seen in China as a model of modern manufacturing based on industrial estates in Singapore.
Tianjin Eco-city meanwhile is a 30 sq km green township development that broke ground in 2008 and will be fully completed in the 2020s. The “model for sustainable development” is a residential and commercial complex which now has a population of 70,000 people and 4,500 registered companies, according to The Straits Times.
Announced in November 2015, the Chongqing Connectivity Initiative is aimed at improving the city’s transport links with Southeast Asia and Central Asia. The project will focus on financial services, aviation, transport and logistics, and information and communications technology, Singapore‘s Ministry of Trade and Industry has said.
3 China’s investment in Singapore
According to official news agency Xinhua, Chinese investment in Singapore’s non-financial sector totalled US$4.2 billion in 2016 and accounted for 45.2 per cent of its non-financial investment in Association of Southeast Asian Nations members last year.
Chinese have invested in real estate and infrastructure construction in the city state, as well as venturing into the service sector – including bike-sharing apps.
Singapore has been a favourite destination for Chinese property developers, accounting for 15.4 per cent of their more than US$2.5 billion of outbound investment last year, Xinhua said.
And in 2016, Chinese and Hong Kong developers accounted for S$1.3 billion (US$964.6 million) of the total S$2.1 billion in residential government land sales – or 62 per cent of the transactions, according to a report by real estate consultancy Knight Frank.
4 Maritime trade
The Strait of Malacca, the main shipping channel between the Indian Ocean and the Pacific Ocean linking major Asian economies, has made Singapore a key oil hub for the region and in particular for China.
Some 82 per cent of China’s oil imports pass through the South China Sea after going through the Malacca Strait. The South China Sea meanwhile sees annual trade traffic of US$5 trillion a year.
Some US$600 billion worth of commodities pass through Singapore every year – it has the biggest port in Southeast Asia and is an important transshipment centre for the region.
5 Free trade agreement upgrade
China and Singapore recently agreed to start negotiating to upgrade their free trade agreement, and on Tuesday Li called for both sides to push forward progress on the talks. The existing free trade agreement took effect in 2009. Total trade between the two countries grew 60 per cent to US$85 billion last year from 2009. China has been Singapore‘s biggest trade partner since 2013.