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Singapore's cooperation with China needs to be up to date to keep its relevance, Prime Minister Lee Hsien Loong said on Apr. 1.
In response to a question from the media about the need to continue working on the relationship between the two countries, PM Lee highlighted :
"We have an FTA (free trade agreement), we've upgraded it. Now we have subsequent negotiations on the FTA to widen its scope to enhance the favourable terms which it offers to extend to us some of the privileges which are in other FTAs, which China has concluded since a Singapore-China FTA was done."
This will mean more opportunities for Singapore's business people, and more competitiveness for them, he added.
"And I hope also it will mean more opportunities for Chinese companies to come to Singapore and do business in Singapore," he said.
China's relationship with Singapore is "good"
The remarks were made by PM Lee at the conclusion of his week-long official visit to China, his first since 2019.
The trip was substantive, with PM Lee meeting four of the most important members in the Chinese leadership, including President Xi Jinping.
In summing up the state of China in the wake of the Covid-19 pandemic, PM Lee opined that China is "moving forward strongly", as they hope to "reopen and re-establish the links with the rest of the world as soon as they can".
PM Lee also described the relationship between China and Singapore as "good", adding that there have been substantive MOUs (memorandums of understanding) and cooperation projects that have been signed during his trip.
He continued that the Chinese are cognisant of the "black clouds" in terms of the overall geopolitical environment.
"They see of course from the Chinese perspective, what problems it causes them and what the dangers are to them. But they want friends and they would like particularly to have stability and cooperation with the other Asian countries including Singapore."
This keenness for stability and cooperation is therefore the environment in which Singapore can continue to work on its relationship with China and go into new areas such as additional financial services, including the financial market, the Renminbi, and food security, PM Lee elaborated.
These are areas where there is potential for growth, as well the need for Singapore to "maintain linkages at a time when international linkages cannot be taken for granted", he mused.
"So I think it is a very useful trip for me. I have met old friends, old friends in new places and new friends. And there is good will, there is a lot of warmth, and there is eagerness on both sides to make the most of our relationship."
Many existing projects between China and Singapore are being taken to the next level
As for specific projects between China and Singapore, PM Lee referenced the Suzhou Industrial Park as an example of how it is being updated to remain relevant in the context of relations between the two countries.
The prime minister noted that 30 years ago, the park had started off as the model for developing a township, attracting investment, and generating confidence.
These were the priorities of China at that time, PM Lee noted.
The park now engages in research and development (R&D) and has a substantial population.
"It has kept its links with Singapore. Our universities have research ventures there, together with Chinese universities. So it is kept up to date, and it has kept itself relevant," he stated.
Both countries have also been doing much together in terms of financial services, he pointed out.
As an example, PM Lee said it has been 10 years since Renminbi settlements can be completed in Singapore.
This has resulted in more financial business and activities, as well as more people investing in Singapore, making use of its banks and financial institutions.
"And now that we have that, we're talking about the next stage, how we use e-CNY or the electronic Yuan which the Chinese are experimenting with, extend that to Singapore, experiment with that, talk about capital markets."
The Chinese are therefore trying to develop their bond markets and whether it can be part of the connection between Singapore's and Shenzhen's stock markets, such that trading can be done from Singapore.
PM Lee further explained that when trading grows, it will also result in more firms not just finding the infrastructure in China, but also coming to Singapore and making use of the facilities here, resulting in a win-win situation for both sides.
"So when we have good relations, you have to keep on working at it. It does not just automatically stay fine. You have to keep on making it better and better. We are never satisfied."
Exchange of people between both countries has been hindered by lack of flights
PM Lee also highlighted that both Singapore and China are in the process of restoring civil aviation services and air services connectivity back to pre-Covid levels.
"They are not quite there yet, they are at only 40 per cent of pre-Covid levels, and in the process of getting there, and we are talking to the Chinese to encourage them to move faster, so that we will be able to get more people to flow.
Part of the flow is hindered because there are not enough flights. I think part of the flow has not resumed because the Chinese have not fully lifted the visa requirements on tourists to the mainland."
He further noted that thus far, visa requirements have only been lifted for Hainan island, but not for the rest of the country.
PM Lee shared that he had raised the matter with Chinese Premier Li Qiang, who replied that "he will look at it".
"I think the Chinese people will want to travel too and we are looking forward to seeing them at Marina Bay and the Merlion is looking forward to taking pictures with them," PM Lee said.
Increasing strategic competition between China and U.S. is "very worrying"
PM Lee also described the increasing strategic competition between the U.S. and China as "very worrying".
The prime minister noted that there were trends pointing towards the fettering of trade as a result of competition between the two countries.
"Many Europeans talk about this, they are worried about it, the Chinese are clearly worried about it, the American government, they say they do not want the decoupling of the economies. But in fact, there are...trends (which) presently mean that the trade is going to be much less unfettered than it used to be."
Should such trends continue, there will be less trade, investments, economic opportunities, and less global GDP, he said.
The International Monetary Fund Chief, Kristalina Georgieva, has since estimated that drop in GDP to be about seven per cent, PM Lee further noted.
And this is just the impact of decoupling on trade and investment, he highlighted.
"If you take into account that there is also the impact on innovation, on technology, on creativity, there is much more than that, so the cost is very high."
PM Lee added that he did not think trade between the two countries would be reduced to zero however, given that the volume between China and the U.S. in 2022 was US$700 billion — a "record high."
"So there will still be the need to do business and to interact with one another. But it will be much less flat, even playing field with no unnecessary obstacles," he said.
PM Lee then voiced his hope for countries to continue to work together at the World Trade Organisation, recognise national security considerations, the need for assurances, and secure supply chain resilience.
He also voiced his hope for the possibility of countries not being overly dependent on any particular partner.
Asean countries want to have good relations with both the U.S. and China
Within the larger context of the Asean region, PM Lee highlighted that Asean countries want good relations with both the U.S. and China.
"And I think the Chinese would like good relations with Asean countries too. And the Chinese can do quite a lot to make it easy for Asean countries to want to have good relations with it," he pointed out.
The prime minister elaborated that the region's trade and investment relations take place within the context of the overall relationship between China and Asean, which includes all kinds of issues — security issues and the South China Sea, among others.
"How those are handled sets the climate in which the economic cooperation progresses.
(The) more it is possible for China to have to create, manage its approach to ASEAN countries, all of which are much smaller, in order to give them space to enable them to have their interests fairly respected and preserved, I think the easier it will be for the Asean countries to pursue further investments and trade with China to enhance and prosper their economic relations."
Top photo by MCI via Lee Hsien Loong/Facebook