Population (2018): 1.4 billion
GDP (2017): RMB 90 trillion
World Bank “Ease of Doing Business” Rank (2019): 46
Bilateral Trade with Singapore: S$135 billion
Trading Partner Rank (2018): 1
Sources: CIA The World Factbook, World Bank
With a population approaching 1.4 billion and a booming upper middle class, China is Asia’s largest economy and the world’s second largest economy, bringing abundant opportunities for everyone. Singapore companies can capture these opportunities by having a unique value proposition and a clear market entry strategy in China’s highly competitive market.
Bilateral economic ties between Singapore and China have strengthened over the years since 1990. In 2017, Singapore’s largest trading partner was China, and Singapore was China’s top foreign investor from 2013 to 2017. In 2017 alone, Singapore invested US$4.8 billion (S$6.6 billion) in China. Joint economic ventures between both countries continue to develop through the years, with latest partnerships including collaborations for the Belt and Road Initiative (BRI) and the third government-to-government project known as the China-Singapore (Chongqing) Demonstration Initiative on Strategic Connectivity (CCI). Singapore companies, with their strong expertise in the areas of infrastructure, professional services and innovation, have much to contribute to these ventures.
Sino-Singapore economic ties since the 1990s have focused on trade and finance. Today, as our collaboration continues to evolve, more Singapore companies are venturing into the services sectors in China1. Singapore companies’ strong expertise in food, healthcare, education and environmental services complements China’s growing demand for a higher quality of living and enhanced amenities.
China is entering a phase of medium-high growth with significant business opportunities in consumerism, digital economy, infrastructure and innovation. The Chinese government set a 7% annual growth target in its 12th Five-Year Plan (2011 – 2015) and a 6.5% growth target in its 13th Five-Year Plan (2016 – 2020). These targets reflect China’s efforts to rebalance its economy, focus on the quality of growth and maintain the objective of achieving a “moderately prosperous society” by 2020 (doubling GDP for 2010 – 2020)2 .
At the 2018 Boao Forum for Asia, Chinese President Xi Jinping highlighted China’s commitment to open up markets, grow regional economic integration and strengthen intellectual property protections3. He noted China as a defender of globalisation and multilateralism, citing the Belt and Road Initiative as a key project that embodies these values. President Xi also pledged to explore opening more free trade ports and continue with economic and trade liberalisation.
With greater economic liberalisation as a strategic development plan, China will adopt major reforms to broaden market access in the services sector and ease restrictions on the financial sector. President Xi’s promise to improve the country’s cooperation with foreign markets is also an opportunity for Singapore to continue strengthening its bilateral economic ties with China.
Technology and innovation are key drivers of China’s economy. In 2017, China’s digital economy was worth RMB27.2 trillion (S$5.4 trillion) and accounted for 32.9% of its Gross Domestic Product (GDP)4.
The country’s expenditure on research and development totalled RMB1.75 trillion5 (S$347 billion) in the same year, and was responsible for the world’s second largest number of scientific research articles written6. In 2016, as part of its 13th Five-Year Plan, the State Council issued a national strategy that aims to build China into an innovative country and a scientific and technological power7.
These plans will focus on uplifting medium- and high-end industries, developing new growth drivers, expanding development spaces and improving development quality and efficiency. As part of these plans, China is looking to collaborate with international innovators to open the Chinese market up even more. Singapore companies should ride on these developments to collaborate with Chinese companies on innovative solutions.
The Belt and Road Initiative (BRI) or 一带一路倡议 is a global development strategy proposed by China to build ties along the overland Silk Road Economic Belt and the naval trading route known as the 21st Century Maritime Silk Road. It was proposed by President Xi in 2013.
Through infrastructure development, it aims to promote the flow of people, goods, capital and ideas between Asia, Africa and Europe, connecting an estimated 4.4 billion people across more than 60 countries. From 2014 to 2017, China invested more than US$60 billion (S$82.6 billion) into countries along the Belt and Road.
Singapore was an early supporter of the Belt and Road Initiative. Today, one-third of all Chinese outward investments to Belt and Road countries flows through Singapore.
The realisation of the BRI requires physical infrastructure – roads, rail, ports and aviation – undergirded by a strong financing framework. As an international financial and business centre, Singapore-based companies are well-placed to support these infrastructure developments. Singapore companies can offer expertise in urban planning, mixed-use parks, and smart city systems. In addition, Singapore’s ecosystem of professional services offers expertise in fields such as infrastructure project financing, corporate structuring, financial and legal risk management, mediation and arbitration, to ensure that projects are sustainable, bankable, and beneficial for all parties.
Infrastructure Asia, jointly set up by Enterprise Singapore and the Monetary Authority of Singapore (MAS) in 2018, will bring together Singapore-based and international players across the entire infrastructure value chain to capture these regional infrastructure development opportunities.
Since the 1990s, the Singapore and Chinese government and companies have been actively working together on projects, beginning with the first Singapore-China government-to-government project, China-Singapore Suzhou Industrial Park.
Having experienced years of strong growth driven by the Chinese domestic market, Chinese companies are increasingly looking to overseas markets for their next phase of growth. Singapore companies, with their experience and networks in Southeast Asia, are well positioned to partner Chinese companies in their expansion into the region.
To mark a new chapter of Singapore-China cooperation, Singapore and China signed an MOU on third-party market cooperation in Beijing in April 2018. Singapore and Chinese companies should leverage each other’s advantages as partners – Singapore’s strength as a financial, trading, and professional services centre in the region, and China’s expertise in manufacturing, infrastructure development and engineering, e-commerce, and other domains.
Both countries will also jointly promote third-party market cooperation through regular forums, seminars, and business matching sessions.